Ethereum 2.0 is Coming! Here’s Everything About the New Upgrade.
Etherium 2.0
YONKERS, WESTCHESTER COUNTY, NY — February 1, 2022 — Since its launch in 2015, Ethereum, the decentralized blockchain technology, has become one of the largest networks in the cryptocurrency market. Second, only to Bitcoin, Ethereum is preparing to launch Ethereum 2.0, intended to significantly revolutionize the world’s largest smart contract platform, with upgrades to make the network more sustainable, scalable, and secure.
Ethereum 2.0
Ethereum 2.0, known as ETH 2.0 or Serenity, upgrades Ethereum on several levels. ETH 2.0’s prime objective is to boost Ethereum’s transaction capabilities, reduce fees and the network’s sustainability with a sequential shift from the proof-of-work consensus mechanism to proof-of-stake.
The transition to Ethereum 2.0 is not abrupt, with the concept of the proof-of-stake mechanism existing in the Ethereum community for years. Ethereum is only just catching up to several proof-of-stake blockchains that already exist, with Polkadot, Cardano, and Solana being some of the most notable proof-of-stake mechanisms by market cap.
Ethereums upgrade to version 2.0 will have an extensive effect on the Ethereum price. Its lower fees open up the network, allowing a broader range of users to buy Ethereum and make faster transactions.
The Shift to Proof of Stake
Proof of Work or PoW, the original consensus mechanism used by blockchains, requires computers to compete against each other to facilitate cryptocurrency transactions.
The PoW process is time-consuming and extremely energy-intensive. For this reason, Ethereums upgrade to the 2.0 version will allow it to transit to PoS to allow for lower fees and faster transactions.
The proof-of-stake network addresses the scalability issue of the proof-of-work network by implementing sharding.
With PoS, a consensus is achieved using an algorithm that chooses a node to secure transaction blocks, rather than the nodes competing using large amounts of power to win the block.
With PoS, these nodes are generally referred to as “stake pools.”
Stake pools are picked based on the size of the “stake” it contains. In other words, the more cryptocurrency a pool holds, the likelier it is to be chosen to produce a block and get rewards.
Like the number of times coins have been staked for, other criteria are a selection process to ensure the wealthiest pools do not always win.
Some PoS blockchains have an additional degree of randomization in the process so that larger or older stakes do not always win.
In PoS, stake pools allow investors to stake their coins to replace miners. Investors can “stake” their coins in seven different stake pools, similar to miners joining a mining pool to earn rewards.
ETH 2.0 Upgrades
ETH 2.0 consists of a new set of upgrades that will improve the network’s security, sustainability, and scalability. Even though each is being worked on in parallel, they each have certain dependencies.
The Beacon Chain
The beacon chain doesn’t change anything about the Ethereum network. It will introduce proof of stake to Ethereum.
Mining is harder than staking and becoming a validator, and it is hoped that this will make Ethereum more secure in the future.
The network becomes more decentralized and safer as more people participate.
The Mainnet Merge
The Beacon chain is shipped separately from Mainnet, which Ethereum currently uses. Ethereum Manner is secured by proof-of-work, while the Beacon chain runs parallely using the proof-of-stake.
The merge is when these two systems come together. Mainnet will “merge” with the Beacon chain, becoming its shard using proof-of-stake instead of proof-of-work.
Mainnet will bring the capability to run smart contracts in the proof of stake system, plus the entire history and the current state of Ethereum, ensuring that the transition is smooth for all ETH users and holders.
The merge will signal the end of proof-of-work for Ethereum, starting the era of a more eco-friendly, sustainable Ethereum.
Shard Chains
Sharding will reduce the congestion on the network and increase transactions per second by creating new chains known as “shards.”
Shard chains will help spread the network’s load across 64 new chains, improving Ethereum’s capacity and scalability.
This process will make Ethereum more accessible for users, allowing more people to run clients or participate in a shared Ethereum, increasing its security. The network is more decentralized, having a smaller attack surface area.
Final Thoughts
Assuming the transition goes over without any issue, the new Ethereum 2.0 will emerge from the process in a significant position to take over as the new cryptocurrency king.
ETH 2.0 will be a trusted system with fewer scalability issues and a larger set of features than its primary competitors. Time will tell if the new upgrade signifies a new blockchain era, but it’s certainly a dawning for Ethereum and the cryptocurrency market.
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