BITSONIC’s Crypto Guide — Ethereum 2.0
Why Ethereum 2.0?
There are five main goals for Ethereum 2.0 development.
- Decentralization
- Strengthen flexibility
- Strengthen security
- Strengthen persistence
- Eliminate complexity
A fatal weakness of the PoW method has revealed the disadvantages of the current Ethereum. They are the slow transmission speed due to the stagnant transactions, a surge in gas prices, and a malicious 51% attack. Therefore, various methods that can compensate for those weaknesses and secure the Ethereum blockchain will be added in Ethereum 2.0.
Phase 0: Beacon chain configuration and PoS added
In Phase 0, the Proof of Stake method (a.k.a Staking) was added to the existing Proof of Work method (a.k.a Mining) in Ethereum. In Ethereum 2.0, switching from Proof of Work (PoW) to Proof of Stake (PoS) is the final goal. However, since these two methods cannot be changed right away, they will coexist for the time being.
The beacon chain refers to the consensus layer that creates and verifies blocks of Ethereum 2.0. When a user stakes at least 32 Ethereum on this beacon chain, the staked Ethereum is immediately locked up. Then, the user becomes a node and can participate as a validator of the network. And the user will receive BETH as a reward for staking.
As ETH is gradually staked, the quantity will continue to decrease. Eventually, the monetary value of ETH will disappear, and the value of BETH will naturally increase.
“Ethereum and the blockchain technology based on it will continue to operate, but in the end, the value of ETH will converge to zero and disappear,” said Ethereum founder Vitalik.
Phase 1: Introduction of sharding technology
In Phase 1, the introduction of sharding technology is prepared. Sharding is a technology that divides and processes transactions into several small other networks (shards that can process transactions in parallel. It is to say, the transmission speed is getting faster.
Phase 2: Shard mainnet operation
On August 4th, the Medalla testnet, the version of the testnet before the Ethereum 2.0 upgrade, went into operation. This testnet is known as the last testnet before the release of the Ethereum 2.0 mainnet in November. However, it has not yet provided BETH rewards to nodes participating in PoS through the testnet. Also, the mainnet will be started if the testnet operates without any problems for at least two months.
In conclusion, Ethereum 2.0 has three significant points;
- PoS added
- Faster Transmission Speed
- No hacking
