Ethereum 2.0 – The Roadmap
Ethereum is constantly reinventing its old ways especially now that it’s transitioning to a new and improved consensus algorithm. Previously known as “Serenity”, the plan took years in the making even before Ethereum was launched in 2015 for the first time. Today, it’s more commonly known as Ethereum 2.0.
What is Ethereum 2.0?
Ethereum 2.0 is a set of system upgrades for the current Ethereum network (referred to as Ethereum 1.0) to be more scalable, secured, and sustainable.
Unlike Bitcoin, Ethereum has extended its use beyond decentralized finance to a more diverse platform for decentralized applications (Dapps). Using the Ethereum blockchain and trading ether may have gained immense popularity and delight after a short span, but it’s also faced with limitations such as:
- The mining process is so energy-intensive which is a concern for our current global predicament that is climate change.
- Since Ethereum hosts over 2,700 Dapps, there’s congestion in processing transactions leading to higher transaction fees.
- When there are fewer miners because of high competition, it defeats the concept of decentralization which also creates a loophole in security.
Ethereum 2.0 will address these limitations through 3 main aspects.
ETH 2.0 Upgrades
In the Proof-of-Work (PoW) mechanism, miners compete in solving a complex mathematical problem to create the next block in the blockchain in exchange for tokens. The higher the computing power of your mining rig is, the higher your chance of earning tokens.
This intensive energy of keeping the Ethereum blockchain secure is unsustainable. In Ethereum 2.0, a new consensus mechanism will be adapted called the “Proof of Stake” or PoS. Instead of miners, validators will stake at least 32 ETH and will be chosen randomly to create new blocks.
Ethereum 1.0 can process 15 transactions per second. The solution to the delay and the high transaction fees is by adding more nodes, without increasing their size, to boost the processing to more than 100,000 transactions per second.
While it complements the ETH 2.0 upgrades, there are certain upgrades on the ETH 1.0, such as the London hard fork or the EIP-1559, that solves the scalability issue also. Make sure to check on updates from crypto exchanges on how this hard fork would affect your transactions.
Ethereum 2.0 staking keeps fraud validators in check. If they try to attack the network, the algorithm will destroy their ETH. This is comparable to destroying the mining rigs, which isn’t possible with the PoW mechanism. On top of this, the possibility of a 51% attack will be reduced when validators are chosen randomly.
Also, it encourages decentralization by adding more validators because of the less-intensive hardware — validators can participate even with just a laptop. As of this writing, there are more than 240,000 validators with approximately 8 million staked ETH.
When Is Ethereum 2.0’s Release Date? (ETH2.0 Timeline)
There are 3 phases to complete Ethereum 2.0
- Phase 0 — The Beacon Chain
This phase was live on December 1, 2020, at noon UTC. The Beacon chain with the PoS mechanism runs parallel to the PoW mechanism of the Eth 1.0. This way, the beacon chain introduces staking which is needed to coordinate validators randomly to different shards (Phase 2).
- Phase 1 — The Merge
In this phase, both versions of the Ethereum blockchain will merge in a process called “docking”. The previous beacon chain that’s unable to run smart contracts will adapt this ability from Ethereum 1.0. Similarly, the PoS will permanently replace PoW — eliminating the process of mining.
This merge, which will be complete sometime in the first half of 2022, should be seamless and will automatically upgrade for Ethereum users.
- Phase 2 — Sharding
Lastly, sharding will solve the scalability issue by cutting up the blockchain into parallel sections. Eth 2.0 is expected to launch 64 shard chains which translate to 64x more throughput compared to Ethereum 1.0. Nodes will be assigned to each section so validators can work simultaneously — thus speeding up the transactions.
The last phase will be completed also in 2022 after the merge.