Ethereum 2.0: What to expect
An overview of What’s new on Eth2.0
Why did Ethereum soar and crash? Renovation of Ethereum. How will it be possible to make more money on Ethereum 2.0 (Serenity) after launch?
According to the founders, the idea of Ethereum appeared because of dissatisfaction with too many applications stored centralized on giant platforms such as Amazon, Microsoft, and Google.
Ethereum was intended to give the worldwide opportunity to make decentralized applications with Ethereum blockchain. The central idea of Ethereum is a smart-contract that is to fulfill the agreements without a third party. This means that these transactions are irreversible and transparent.
The founders mark that during the last two years plenty of researches was held to improve the scalability and the speed of transactions. Now the developers are more aware of the possibilities of Proof-of-Stake and models of Sharding safety.
From Ethereum 1.0 to Ethereum 2.0
The biggest change in Ethereum 2.0 (launched in the second half of 2020) is the transition from mining to staking. Until recently, Ethereum worked with the Proof-of-Work algorithm. Previously miners compete in solving an extremely complex mathematical problem and received a reward for this. To mine cryptocurrencies, people bought impressive equipment and were prepared to pay huge bills for the electricity.
The Proof-of-Stake (PoS) algorithm determines the probability of this or that node (network participant) to form the next block in the blockchain that is proportional to the node’s share of cryptocurrency. This creates a financial incentive for the network to work without interruptions. To take part in the placement of blocks, the investor needs to launch his node and have at least 32 ETH coins on his account. Compliance with these conditions, as well as the activity of the account and the time spent in the network will allow the participant to create a block. The advantage will be for those who have more funds in the account.
Among the most important updates, the following can be distinguished:
- Proof of Stake
A Roadmap for switching to Serenity
Ethereum 2.0 will be updated under the Serenity chain, which represents a global computer. It will be able to support thousands of transactions simultaneously without commission increases and will still preserve energy efficiency.
Phase 0 — Beacon chain
Ethereum chain will transfer to the consensus algorithm Proof-of-Stake with Beacon blockchain.
The main aim of the Beacon chain is coordination between PoW and PoS as well as communication with Shard chains (a system of subchains for better scalability) and a Virtual Machine.
Phase 1 –Sharding
Sharding is a technology that processes all transactions and splits them into segments (shards). At the same time, each blockchain node process a part of the entire block, which supports scalability without loss of processing speed.
Phase 2 — eWasm
At this step, the account balances and the fulfillment of smart-contracts will be added. The integration of eWasm, an Ethereum Virtual Machine, allows fulfilling the code much faster. It also provides a more convenient environment for developing.
Phase 3 — Further improvements
It is planned to implement the following technologies:
- Сross-shard transactions — these are transactions that involve nodes of two different shards;
- Light clients — mobile clients that require fewer data to download a connection to the blockchain and then make transactions on the ETH network;
- Super-quadratic or exponential sharding — used when more than two levels of communication between transactions and block headers of the upper level are required (that is when “shards of shards” are needed);
- Tight coupling with main chain security.
What to expect from the changes?
As with mining, staking will create a reward system, although the question of how much income can be earned by interested parties has not yet been determined. The founders suggested that we are talking about a range of 1.5–18% depending on the sum. However, experienced Ethereum users claim that the real figure is likely to be around 5%.
Serenity is a technologically ambitious plan that leads to the creation of a new global computer. If developers succeed in realizing their ideas, a blockchain of a truly scalable smart contract network will be created with a variety of assets that can attract developers, investors, and ordinary users.