ETH v/s ETH 2.0

The fundamental differences between Proof of Work v/s Proof of Stake Ethereum and it’s Sustainability

Published in

Coinmonks

9 min readMay 31, 2022

Hey there 👋 Readers, I hope you’re doing well

Looking at the fact that the Ethereum Merge (Hard Forking ETH to ETH 2.0) is nearing, It’s only fair that I write something about it and simplify it as much as I possibly can so that my readers can stay up to date on major events.

In short, After the merge, ETH would no longer be minable and would free up a significant amount of hashing power and the respective energy it consumed to keep the network up and running and would be replaced by validators who would have to stake a certain amount of ETH (min 32) in order to participate in consensus making.

To fully grasp that, We’ll first need to take a deeper dive into ETH and how it came into existence

Time for a quick history lesson

What makes eth so special?

BTC was a major breakthrough in decentralization however, Due to its relative age (BTC is considered a gen 1 cryptocurrency) it lacked any functionality to interact with Decentralized Apps (Dapps) or the ability to deploy Logic onto the blockchain in any feasible way thereby preventing large scale adoption within the community.

Ethereum was the first-ever Turing complete blockchain which meant it could do almost anything a normal computer could do. It was a major shift going from BTC to ETH, reminiscent of a Paradigm-shift. Now, there was a way for people to develop much more complex applications which were public and immutable (can’t be changed) in the form of Smart Contracts. A new programming language was explicitly built for ETH smart contracts named “Solidity”. It was proposed by none other than Gavin wood in 2014 and was later built by the eth core contributor team.

Fun Fact: SWIFT deployed a proof of concept using Solidity to send and receive international payments.

If you want to develop a better understanding of crypto, Read this : https://medium.com/@dev.anky.b/complete-web-3-0-for-dummies-4e84e4c5fc3c

But as they say, You cant get everything. There’s something called the Layer One (L1) Trilemma :

◉ Secure

◉ Decentralized

◉ Scalability

(Choose any two)

Eth compromised scalability to achieve superior amounts of Decentralization and security

That’s where L2 scaling solutions like Polygon, Optimistic, or ZK rollups come in handy

They scale up the Transaction cost as well as the Transaction rate (Refer to Layer 2 in “This”)

ETH 2.0 aims to achieve native scalability, it’s not out of the realm of possibility for them but the last time they tried doing something drastic, They gave us EIP-1559 to control Gas prices but we all know how that went 💀

That’s all well n good, But how do they plan to merge?

They’ll vote on a proposal (an EIP)to Hard fork Ethereum to Ethereum 2.0 and they’ll need a majority vote to succeed.

But What’s a Hard Fork?

Hard-Fork is a radical change to a network’s protocol that wields the power to change everything about it from the ledger to the underlying blockchain and its workings.

refer to ‘This’

Was Ethereum ever Hard Forked Before?

Yes, After the DAO hack in 2016 Ethereum network was hard forked and the Older version was named Ethereum Classic and the new blockchain is Eth as we know it.

They basically Reversed the transactions the DAO hacker made and returned everyone their funds, however, it was a very controversial move as they violated the principles which Crypto Fundamentalists stood by “Code is Law” and “No Centralized Control” but the proposal passed without any problems.

I’d love to hear your thought’s about the ETH hard fork in the comments

With that said, You might ask what is Proof of Work?

‘Proof of work’ is nothing but a form of cryptographic proof in which one party proves to others that a certain amount of a specific computational effort has been expended. This is measured in terms of Hash Rate (H/s). Verifiers can subsequently confirm this expenditure with minimal effort on their part.

A key feature of proof-of-work schemes is their asymmetry: the work and the computation must be moderately hard (yet feasible) but easy to verify. This idea is also known as a CPU cost function. Another common feature is a built-in incentive structure that rewards allocating computational power to the network in the form of money or in this case a part of the Transaction Fee.

This is how the Ethereum Network Incentivizes Miners to provide Security to the Blockchain in return of Monetary Incentives. Basically, you Mine for Solutions and then get paid for it.

In proof-of-work, miners prove they have capital at risk by expending energy.

Now we’ll Discuss the power and hardware requirements of Proof of Work

As of yet, Ethereum uses about 120 terra watts per year at the current Network Hash rate of about 1.2 PH/s give or take. That’s a lot of power, in fact, it’s equivalent to what the Netherlands uses in a whole year.

It’s estimated that a single transaction uses as much electricity as an average us household does in a day.

And then there’s the sustainability aspect of it, cause most of that energy comes from carbon-intensive sources. And as much as we’d Like, They haven’t figured out a way to make small, makeshift Nuclear fission Powerplants that I can set up in my backyard or create working Fusion Reactors.

Hydropower is understandably not present everywhere, Wind Turbines are Extremely inefficient and kill more birds than your uncle on his monthly hunts and Cheaply made Solar panels (which are easily available and hard to tell apart) break down well before 4–5 years and contain substances much worse than Nuclear waste as it’s toxicity doesn’t decrease with time (arsenic doesn’t break down in the environment into simpler substances)

All the Computing is done by GPU’s and its ability to perform required calculations is measured as their Hashing Rate. Each GPU has a different hash rate according to its specification and configuration.

Also, If not properly tuned it Increases the risk of Bricking your Graphics Card Multifold thus creating another problem, an e-waste endemic which is one of the harder problems to deal with as these products were never designed keeping sustainability in mind.

Before going further, Let’s take a look at Proof of Stake

Proof-of-stake is a type of consensus mechanism used by blockchains to achieve distributed consensus or agree if a transaction is valid or not. In proof-of-stake, validators explicitly stake capital in the form of ether into a smart contract on Ethereum. This staked ether then acts as collateral that can be destroyed if the validator behaves dishonestly. The validator is then responsible for checking that new blocks propagated over the network are valid and occasionally creating and propagating new blocks themselves

In proof-of-stake, validators prove they have capital at risk by staking the Native token which could be destroyed if the user acts maliciously.

This Basically shows that you have ‘Skin in the Game’ and you wouldn’t have an incentive, monetary or otherwise to act dishonestly or your staked capital would be at risk.

After making that clear, We’ll figure out the Energy and Hardware requirements of Proof of Stake Ethereum

The estimated energy consumption for Eth 2.0 would be 99.95% lesser than its proof of stake counterpart and bring it closer to 600 gigawatts/year which is much more manageable

The Hardware requirements for being a validator would be an efficient but top of the line pc with its dedicated power and Internet devices so that the uptime is as close to 100% and the need for the number of individual validators would also reduce drastically.

This would result in the Mass Migration of Hash rate into other often smaller Proof of work Projects and wouldn’t be taken offline as initially thought.

The energy footprint of Eth would drastically reduce but for Crypto as a whole, It’ll stay the same due to the cards still being online which is kind of a buzzkill.

Comparing sustainability of both the methods

Ethereum Organization claims that the Ethereum upgrade would reduce energy requirements by up to 99.95%. That’s a 2000x change as compared to the Proof of Work consensus mechanism which is a significant reduction.

The estimated energy requirement of Post Merge Ethereum is ≈ 600 gigawatts.

As discussed above, The difference in Environmental impact of the Ethereum upgrade is too significant to overlook and would certainly help in combating the notion that cryptocurrency cannot be environmentally sustainable.

Transitioning from ETH to ETH 2.0

After the Planted Eth Difficulty Bomb goes off, Mining would become exponentially harder until the point that it’s not even remotely profitable which disincentives miners. This however might Significantly reduce Ethereum’s security in the short term so They’ll need to keep the miners around and Happy throughout the transitory period.

If the ‘Merge’ proposal is Ratified, The Upgrade would start rolling onto the Ethereum Main Net. It’s currently being rigorously tested in the Test Nets to make absolutely sure there isn’t any major security vulnerability that jeopardizes the whole Network.

This results in lengthy but crucial Delays. The Merge is expected to happen this Month

However, IMO they should take their time and not rush it as it could end up badly if they’re not careful.

Does the Merge centralize Ethereum?

This question is meant to be thought-provoking and I want to know your honest thoughts about it

Ethereum Foundation now would have the power to reverse certain transactions they deem unfit or malicious. Do you think this violates the core principles of cryptocurrency?

Also, To become a Validator, You’ll need to stake a minimum of 32 Ethereum which is well out of reach of an average joe. Does this move take away power from individuals and hand them to Institutional Investors?

I’d really love to hear all about it, email me your thoughts @dev.anky.b@gmail.com if you feel like it.

That’s gonna be it for today, Until we meet again 😌

Note : I initially wrote this keeping sustainability in mind but decided to add other stuff too cause it seemed fit. Hope you enjoy this, Cheers! 🍻

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