What is ETH 2.0 and why does it matter?
Have you ever wondered what the fuss behind ETH 2.0 is truly about? While there are other networks offering functionality when creating Decentralized Applications (dApps) and Smart Contracts, like Cardano or Polkadot, why has ETH 2.0 still remained in the spotlight?
Ethereum is in the development stage to upgrade the network by implementing entirely new infrastructure. However, in the process of development, procedures indeed took their precious time responding to users’ expectations, while making sure it's worth the wait.
In the meantime, any problems that occurred needed to be solved during this development process because once launched on the mainnet, such issues can widely damage the network as many dApps are being run by the Ethereum network.
Today, we’ll take an in-depth look into Ethereum 2.0, along with its various attributes.
In the early stages of cryptocurrencies, proof of work (PoW) was used as the main consensus algorithm when validating transactions on blockchain networks, including Ethereum.
After gaining increased traction around the world, cryptocurrencies’ new algorithms like Proof of Stake (PoS) were created as a solution to high energy consumption and scalability issues that Proof of Work has been facing.
While Ethereum 1.0 is undoubtedly popular amongst developers who are interested in dApps and smart contracts, the matter of scalability has become the most difficult issue to resolve. As a result, transaction speed has yet to have been improved, further leading to higher transaction fees (AKA: Gas Fees) that users are required to absorb.
As a means of resolving such matters, Ethereum 2.0 was introduced as a remodeling of the network’s consensus from PoW into PoS. The solutions supplied by Ethereum are aimed to provide more scalability, security, and more sustainable methods of supporting more users with lower gas fees.
Difference between ETH 1.0 and ETH 2.0
Consensus mechanisms seem to play the biggest role in this development, but there are still a number of details listed on the difference between ETH 1.0 and ETH 2.0 which will be explored below!
As ETH 1.0 has been running on Proof of Work, Proof of Stake was employed as a replacement instead, easily becoming the most challenging part of this upgrade. The network structure was awaiting modification to resolve scalability issues that Proof of Work couldn’t respond to.
ETH 2.0 is being tested in a different network called the Beacon Chain running the Proof of Stake algorithm. In detail, all of the stakings provided by users are being used to run the Beacon Chain and the staked coins will be locked until the merging process between Mainnet (ETH 1.0) and Beacon Chain (ETH 2.0) is complete.
Even though the announcement has been made by Ethereum, informing users that all of the staked coins are not able to be withdrawn until further announcements, Ethereum has still been well-supported by users with approximately 5.3 million Ether and 2 hundred thousand validators. (according to information on August 16th, 2021, Eth2.0 Launchpad).
Moreover, the high energy consumption rate was reduced due to the change of consensus. Ethereum 2.0 has simultaneously provided new technology called Sharding to benefit users by turning data into small equal portions for faster processing.
Smart contract creation tools are changed in ETH 2.0 from Ethereum Virtual Machine (EVM), which mainly uses Solidity, Vyper, and Yul as a computer language, into Ethereum Web Assembly (eWASM) which takes more relation to basic computer languages such as C, C++, and Rust in addition to the existing ones on 1.0.
How important is this development to Ethereum?
All of the details included in the development plans are divided into 3 phases that include upgrades aimed at providing better performance, speed, security, and scalability or reducing the minimum requirements to run a node.
Phase 0 takes relation to the Beacon Chain or Mainnet for ETH 2.0. This process is monitored by the development team to ensure that the network is running properly. Those who want to become a validator are required to supply at least 32 Ether or join a staking pool for those who want to stack only a small amount (less than 32). Any problem occurring in the Beacon Chain will not affect the mainnet (ETH 1.0), hence the implementation of the ETH 2.0 Mainnet as well.
Phase 1.0-1.5 is called The Merge phase, taking regard to transition between ETH 1.0 and ETH 2.0 altogether, resulting in a fully functional Proof of Stake consensus behind the network. Upon completion, miners would no longer be required and users/investors would need to stake their Ether to secure the network instead of mining. Also, all staking coins during Phase 0 can be withdrawn and smart contracts would become available in this stage as well.
Phase 2 is stated to take concern of Shard Chains, which diversify data from 1 block into 64 portions equally, the network will be able to parallel process, meaning they could possibly validate higher amounts of transaction from 15 transactions per second into 1,000 transactions per second.
With the introduction of Shard Chains in the network, the number of users can be greatly increased due to the reduction of the minimum requirements in running a node which allows the network to become more decentralized with higher security.
Ethereum’s development plans have indeed taken time and effort to provide the best performance of the network. What makes Ethereum 2.0 interesting is that it will be able to provide services in dApps and smart contracts with uplifted performance, preventing high gas fees and delay on the network.