Recap from OST LIVE with Gregory Markou, Partner and VP Engineering at ChainSafe Systems — Explaining Ethereum 2.O

Gregory Markou, Partner and VP of Engineering at ChainSafe Systems, joined us on episode 70 of OST LIVE to explain the benefits, development status, and implications of Ethereum 2.0. ChainSafe is the team behind the Göerli testnet, which we covered in episode 49. Markou also teaches blockchain development at George Brown College and at The BlockchainHub in Toronto, Canada.

Sharding

The Ethereum blockchain’s transaction throughput is currently limited to the throughput of one node. Each Ethereum 1.0 node is required to store every transaction on the network. This means that throughput is limited to the speed of a single node, no matter how many nodes are scaled up. Under sharding, the state of the blockchain is split into multiple pieces called shards. Nodes on the network manage single shards instead of the full chain. For example, one shard might be in charge of all Ethereum addresses from 0x1 onward and another shard 0x2 onward, and so on. This allows higher throughput.

Casper FFG

Casper is based on sharding. The Casper Friendly Finality Gadget (FFG) was proposed by Vitalik Buterin. Correct by Construction CBC was proposed by Vlad Zamfir. The main difference is that FFG is focused on transitioning from Proof-of-Work to Proof-of-Stake — from Ethereum 1.0 to Ethereum 2.0 — over an iterative process. CBC is focused on formal methods and formally proving the idea of sharding before implementation. Right now Ethereum 2.0 is focused on FFG, but it may implement CBC or a mixture of FFG and CBC in the future.

Ethereum Virtual Machine

The EVM is at the heart of Ethereum. When a node is operating, it must play by the rules of the EVM. When code is executed against a smart contract, it gets executed on the EVM. The EVM is a set of instructions and rules that guide the node when somebody interacts with a smart contract. If the transaction abides by the rules, it is successful. Every node in the ecosystem needs to have the same implementation of the EVM.

Ethereum 2.0

Ethereum 2.0 represents a transition from the current PoW system to a PoS system. There is currently a massive research effort to build Ethereum 2.0. About eight client implementers are working with researchers to better understand what the network will look like.

Key benefits of Ethereum 2.0 include energy efficiency and increased transaction throughput. Ethereum 2.0 will be energy-efficient because extensive computations are not required with PoS and sharding. The existing PoW algorithm requires expensive computations to determine the chain state. This requires lots of GPUs to be running, which means enormous amounts of energy are consumed. This is why some critics claim that blockchain is bad for the environment.

PoS requires a group of validators to be assigned to a shard temporarily. Two-thirds of the validators must agree on the state of the shard for validation. Slashing conditions will remove the stake from validators that act nefariously. For example, if a third of the validators of a shard disagree with the other two-thirds, then that one-third would get a penalty and lose some of their stake. Each shard essentially functions as its own “blockchain” because it has its own chain state. In PoS, nodes become validators on the network and stake ETH. The staked ETH will be locked up and unusable. Validators on the network are rotated and selected at random to be in charge of shards. Transactions then funnel into the shards, increasing throughput. This is possible because transaction throughput is no longer limited to the throughput of a single node.

In addition, basic commodity hardware should be able to mine on Ethereum 2.0 due to its light computation requirements. In theory, it could be possible to use a cell phone, opening up the possibility for almost anyone to become a validator. Markou says that even a Raspberry Pi system might be able to be a validator.

1. Phase 0: The beacon chain
   Developers are currently working on phase 0 to build the Beacon Chain. The headers of a shard chain are proposed to the Beacon Chain after a certain period of time. The beacon chain has its own Beacon block that contains transactions, which are actually shard headers. The Beacon Chain keeps track of all the shards, keeping them all in sync, and is also in charge of rotating the validators. The Beacon Chain is an “overseer,” while the shard chains underneath it deal with processing transactions. The Beacon Chain does not deal with any transactions directly. Once a shard header reaches the Beacon Chain, it can be assumed that it is the state and it is final.
2. Phase 1: Shards without the EVM
   In phase 0, shards are yet to be added. Empty Beacon blocks are being assembled on the Beacon Chain. The shards and the shard chains are implemented in phase 1. Markou says shards will only be able to send transactions back and forth within shard chains during this phase. The headers are moved upward to the Beacon Chain later. Most computations can’t be made without the EVM. There are likely to be no smart contracts in phases 0 and 1. However, some transactions can be expected to go through.
3. Phase 2: EVM on shards and cross-shard communication
   Phase 2 adds the EVM. The EVM is likely to be an Ethereum-flavored web assembly executable that will execute on almost any machine. Once the EVM is deployed, Ethereum 2.0 will be fully implemented. Phase 2 will also include cross-shard communication, which will allow interactions to be made from one shard to multiple shards. Without cross-shard communication, a smart contract deployed on one shard would not be able to communicate with a smart contract deployed on another shard.

Phase 0 is just starting to reach finalization on a specification level. According to Markou, we can hope to see single-node testnets by the end of March, cross-client implementation in Spring, and a live mainnet launch in the summer or early fall. He also believes that the three phases should be complete in mid-2020. If you would like to get involved with Ethereum 2.0, be sure to check out Ethereum Research or Gitter. EthHub has listed all the implementers involved — the list can be found here.

Coming Up Next on OST LIVE: StartEngine x Swarm

StartEngine’s EIP-1450 and Swarm’s SRC-20 are just two of many protocols being developed to establish a regulation-compliant security standard. This interview will dive deep into Swarm’s SRC-20, StartEngine’s EIP-1450, and the latest in security tokens. Be sure to subscribe to our YouTube channel to watch live and meet community members in the live chat. You can also find OST LIVE on your favorite podcast app, including: iTunes, Alexa, Spotify, CastBox, Google Play, TuneIn, Stitcher, PodBean, Overcast, and Player FM.

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