Ethereum 2.0 Explained For Absolute Beginners
What Is Ethereum 2.0 and How It Is Preparing To Upgrade Itself?
I feel:
“If you are willing to accept your weakness you give yourself a true chance to improve and become better if not the best. I feel this is what is going to happen with the beloved Ethereum blockchain 2.0 upgrade”
Ethereum 1.0 blockchain has seen massive adoption by the crypto developer community, many of the Decentralized applications, decentralized financial solutions are leveraging ETH 1.0 platform to offer crypto pooling, lending, borrowing, swapping, and trading as a service.
But high network congestion, rising gas fee, and slow transaction throughput is now becoming a road blocker for Ethereum and not helping it to scale. To tackle this issue heads-on Ethereum 2.0 is proposed. Today we will look at how Ethereum is prepping itself to become
- More scalable
- More Secure
- More Reliable
- More Energy Efficient
- More Sustainable
What Is Ethereum 2.0?
Ethereum 2.0 is a transition from the current blockchain 1.0 version to a new avatar where the focus is on
- Higher Speed(TPS)
- Efficiency (Process efficiency)
- Energy Efficiency(Less electricity consumption due to P.o.S)
- High Security
- Scalability
These proposed upgrades of the exiting ETH 1.0 blockchain will enable higher transaction processing with a reduced gas fee.
What Are The Proposed Upgrades?
In order to understand deeply how Ethereum 2.0 will tackle all the roadblocks and achieve the desired goal of scalability and speed, we need to understand what are the proposed upgrades that will be instrumental in materializing this vision.
So here are the proposed upgrades:
1. The Beacon Chain: (Migration From Proof-of-Work to Proof-of-Stake)
This upgrade has already been shipped by Ethereum developers on December 1 2020 at noon UTC.
Objective Of This Upgrade:
- To help Ethereum migrate to Proof-of-Stake consensus mechanism
- To help secure blockchain network by new staking mechanism
- To make the Ethereum network more reliable and healthy.
- To reward miners handsomely for being more responsible and to punish them for misbehaving.
Key features Of Beacon Chain:
- Staking
- Shard Chains
Staking: (P.o.S):
Proof-Of-Stake is the key feature that is a part of the beacon chain upgrade. The core idea is to introduce a new way of validating the transaction and finalize the block in the chain. Proof-of-Stake is looking to make blockchain networks more secure via staking.
Ethereum 2.0 Staking requires participants to deposit 32 ETH to activate their validator software. As a validator, you’ll be responsible for
- Storing data
- Processing transactions
- Creating and adding new blocks in the main chain
Though validators will get the reward for performing all the above operations, they are also at risk of losing all their staked ETH f for malicious actions, going offline, and failing to validate.
“So if you are looking to put your ETH and become a staker to support your favorite EThereum 2.0 project , and earn out of it, do ensure you are acting responsibly ”
The Second major upgrade which is still a “Work in Progress” is
2. The Merging Of MainNet With Beacon Chain:
This phase is proposed to be completed by end of 2021- or by starting few months of 2022. The testing phase is ongoing
The objective of Merge Phase:
- To officially migrate the main chain to use proof-of-stake consensus, marking the end of legacy proof-of-work.
- To become highly energy efficient
- To smoothly merge the existing main chain to the beacon chain and attain a complete migration. Currently, the main chain with PoW is active and the beacon chain is also running parallel to it using PoS.
- The ultimate vision of Eth 2.0 scalability, security, and speed will be attained after this merger
What is Merge Phase?
In the first phase, the beacon chain has been deployed to work parallelly to mainnet without replacing it. This mainnet is being used by Ethereum 1.0 which uses proof-of-work, while the beacon chain is being tested with proof-of-stake consensus, so it is this merge phase that will finally unify both the chain to act as a single main chain.
What will this merge phase lead to?
So once this Merge phase is completed, it will enable mainnet to run smart contracts into the proof-of-stake system, plus the full history and the current state of Ethereum, to ensure that the transition is smooth for all the current Ethereum holders and users. Also, this will mark the dawn of Proof-of-work officially
3.Shard Chains:
This phase is planned to be activated once the beacon chain merger with miannet is completed successfully. This phase can take its final shape in 2022, dates are still not final.
What’s The Objective Of the Shard Chain Phase?
- To enhance, Ethereum’s storage capacity and data access.
- These shard chains are being implemented to enhance the network capacity and improve transaction speed by extending the network to 64 blockchains.
- Beacon chain upgrade has one more key objective and that is to ensure that no one staker has a dominating impact while validating the blocks. To do so Beacon Chain will randomly assign stakes to validate shard chains, which will eventually prevent any single stakers to collude and take over a shard.
What the heck is sharding?
It is the process of splitting your main database horizontally to delegate the workloads. These individual shards will help the network attaining
- Reduced network congestion
- Increased transaction throughput
- More validator node to help network scale
Cool Sharding Features :
- Lightweight To Run For Validators :
Sharding will help ethereum blockchain become lightweight in terms of hardware requirements to run the validator software. This will eventually encourage a large no of users to act as validators because now with shard chains, validators only need to store/run data for the shard they’re validating and not for the entire network.
This speeds things up and drastically reduces the dependency on expensive hardware requirements.
- More Secure & Decentralized Network:
After sharding, it will be pretty easy for anyone to use their laptop or smartphone with the internet to start acting as a validator or delegator. More participation will eventually lead to a more decentralized and secure network.
With reduced hardware requirements, sharding will make it easier to run clients on your own, without relying on any intermediary services at all. This will also help ethereum network become more healtheir with max availability and little downtime
EIP 1559 Upgrade:
This proposed London upgrade (that is being tested on the Testnet) has nothing to do with the scalability or speed of the existing Ethereum 1.0 network, but it has been designed to tackle how network Gas fees will be calculated & how rewards will be given to the validators for every successful block the approve.
EIP 1559 has proposed the following key changes:
- The current gas threshold limit will be replaced by two values: a “long-term average target” (equal to the current gas limit), and a “hard per-block cap” (twice the current gas limit)
- There is a BASEFEE (which is burned) which transactions are required to pay, which gets adjusted on a block-by-block basis with the goal of targeting a value so that average block gas usage remains at a level close to the current gas limit.
I have covered EIP 1559 in length & breadth in one of my articles, requesting to please read the same for a depth understanding of EIP changes, their benefits, and features
Here is the link:
Future & The Road Ahead:
Eth 2.0 is perhaps the most-awaited and the most covered event in the history of cryptocurrency. After the berlin upgrade went live, this London upgrade is undergoing a rigorous test and is expected to be rolled out in 2021-2022. I feel that this transition from Eth 1.0 to Eth 2.0 will not be an easy one and may take its own course of time, but will eventually make it in 2022 if not in 2021.
Both ways will change this legacy blockchain for good. Eth 2.0 ‘s vision of making it the most secure, scalable, and sustainable will largely have a positive impact on the sentiments of the crypto market and also encourage the developer community to innovate.
The decentralized finance domain will see even more adoption of this new avatar and more Dapps will be rolled out on this evolved Ethreum platform because two of their major concerns regarding high network congestion and high network fee will eventually be subsidized to a larger extent.
Payment solutions will see even larger adoption of ETH 2.0 platform because the higher TPS will help them serve millions of customers which was not the case with the existing Eth 1.0 where TPS is restricted to 15–30 TPS by design.
Food For Thought:
“If you have the patience to go long and have the curiosity to know more with the honest acceptance that you still know a spec, you have all the chance to extract the best out of this life and succeed in any stream of life you choose to pick and act. This principle also works great in the crypto or any investing domain for that matter. I wish & I hope that this most coveted and awaited Eth 2.0 brings a load of opportunities and smile on the face of one and call ”
Disclaimer!
Opinions expressed here at CryptoWise are not investment advice and are only for educational purposes. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency, or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility
