What is Ethereum 2.0?
Roadmap to Ethereum 2.0
Ethereum 2.0 Development
Differences between Ethereum and Ethereum 2.0
The Impact of an Ethereum 2.0 Upgrade on ETH
Since 2020, the launch of Ethereum 2.0 (or ETH 2.0) onto the public mainnet has been a long-awaited event for many. In this article, you will learn more about what Ethereum 2.0 is, what the Ethereum roadmap looks like, and when the release date will be.
What is Ethereum 2.0?
Short Answer: Ethereum 2.0 is an Ethereum blockchain’s upgrade.
Ethereum 2.0, also known as Eth2, ETH 2.0, or “Serenity,” is an upgraded version of the Ethereum blockchain network. This update’s main purpose is to increase the Ethereum network’s speed, efficiency, and scalability. This is done to avoid transaction bottlenecks and to allow the network to process more transactions at the same time.
Blockchain’s long story short: A blockchain is a decentralized ledger that records all of the transactions. To learn more about Blockchain, click here.
Ethereum 2.0 name change
In January 2022, the Ethereum Foundation announced that they would stop calling the upgrade ‘Ethereum 2.0’. The reason behind the rebranding was to show that what happened was a network upgrade, not a new network launch.
Therefore, “Eth1” has been replaced with the term “execution layer” as smart contracts and network rules were involved. On the other hand, “Eth2” has also been replaced with the term “consensus layer,” since it ensures that devices contributing to the network can act accordingly.
Do you know how Ethereum was created at the first place? Read an inspiring story of Ethereum’s father here.
Roadmap to Ethereum 2.0
The Ethereum roadmap consists of a series of enhancements to improve the network’s scalability, security, and sustainability. There are three major stages until the Ethereum 2.0 upgrade is completed. While each stage is being worked on in parallel, each process will determine the actual release date.
The three stages of Ethereum 2.0 are as follows:
- Beacon Chain
The first phase of Ethereum 2.0 is to implement the new Proof-of-Stake consensus layer, known as the “Beacon Chain”. On the Beacon Chain, each validator has a stake of 32 ETH. Currently, there are 222,052 validators, so the total amount is 7,105,596 ETH. In this phase, the Proof-of-Work system continues to cooperate with the new PoS chain to ensure that the data won’t be lost.
The Beacon Chain stage has already been launched. The release date was on 1 December 2020.
- The Merge
The current Ethereum mainnet will enter the Beacon Chain Proof-of-Stake phase soon. During this phase, the Ethereum development team will switch from the Proof-of-Work consensus model to the Proof-of-Stake consensus model. Even so, transactions and applications on the Ethereum network will continue to function normally.
At this point, the terms “Eth1” and “Eth2” will be referred to as two distinct layers instead, namely “execution layer” and “consensus layer”.
- Execution clients (Eth1): Responsible for transaction bundling, execution, and state management. This layer is represented by Ethereum clients such as Geth, OpenEthereum, Hyperledger Besu, and Nethermind.
- Consensus clients (Eth2): Responsible for validating blocks, also known as Beacon Chain. This layer will be operated by 155,663 validators. Stakers could earn around 4,981,046 ETH in total. The clients include Teku, Lighthouse, Nimbus, and Prysm.
Update: The Merge is slated to launch on 19 Sept 2022, said Tim Beiko, one of the network’s developers, as published on Coin Telegraph.
- Shard Chain
Shard Chain, the next phase of Eth2 to improve its scalability, is expected to be released in 2022 or 2023. Shard Chain will make it easier to store and access data on Ethereum, but it won’t be used to run the code of the entire network.
What the Eth2 development team did not expect was how quickly Layer-2 solutions like Rollups would improve in 2021. Rollups are a Layer-2 technology that solves the problems of blockchain’s computing and storage load while using enough chains to benefit from collateral. This process is safe, making Rollups now an essential part of the Ethereum 2.0 roadmap.
Ethereum 2.0 Development
On 1 December 2020, the Beacon Chain phase was released. However, even though it was already released, Beacon Chain is still not a part of the mainnet. It will be operated in parallel with others until the transition, or “The Merge,” is completed in the second quarter of 2022.
Meanwhile, the Shard chain will increase Ethereum’s capacity for transaction processing and data storage. The phase will begin around 2023.
According to Currency.com, The Merge’s release date is still unknown. However, it is expected to happen in August 2022, marking the end of Ethereum’s PoW consensus. The PoW, which will continue to be used by the Bitcoin blockchain and several other crypto assets, has been criticized for requiring huge amounts of computing power and energy to mine coins.
Differences between Ethereum and Ethereum 2.0
There are two main changes in Ethereum 2.0, which are Proof-of-Stake and Shard Chains.
- Proof-of-Stake (PoS)
Currently, Ethereum 1.0 runs on a Proof-of-Work (PoW) consensus model. PoW relies on physical computing power (miners) and electricity to be able to add new blocks to the blockchain. In the Ethereum 2.0 update, the network will use Proof-of-Stake (PoS) consensus, which can help the Ethereum blockchain improve security, scalability, and energy efficiency. Instead of relying on physical and electrical miners, PoS relies on validators (virtual miners) and ETH deposits.
- Shard Chain
Shard Chain or Sharding is a mechanism that can significantly increase the Ethereum blockchain’s throughput. What Ethereum 1.0 currently has is a single chain made up of sequential blocks, which is highly secure and simplifies the information verification process.
What is Sharding? Sharding is a method that developers use to increase the blockchain transactions and storage performance.
Unfortunately, even during times of high mainnet activity, a single chain requires each node to process and validate each transaction in the block sequentially. Thus, Ethereum 2.0 upgrade has a Shard Chain in which the Ethereum blockchain can be “shared,” in order to distribute the data processing work quickly among multiple nodes. This allows transactions to be processed at the same time rather than sequentially.
The Impact of an Ethereum 2.0 Upgrade on ETH
With the change in Ethereum 2.0, you don’t have to worry about the ETH you currently have. This is because ETH will continue to be fully usable on Ethereum even after switching to Proof-of-Stake model. Think of Ethereum 2.0 as a software update; it doesn’t affect any data or information you have on it.
The price of Ethereum is determined by several factors, and the arrival of Ethereum 2.0 could be one of them. With Ethereum 2.0 moving to Proof-of-Stake, the main income from ETH is not only about gas fees or investing, but ETH can also be used for staking. Thus, this may also cause the price of Ethereum to rise.
However, as the Ethereum 2.0 update progressed, the price of Ethereum fell precipitously until it was oversold. As of July 2022, the price of Ethereum has dropped by more than 40% since 12 June 2022.
Some might be scared to invest in ETH during the previous ETH crashes, but many see them as the opportunity to invest and believe that the upgrade will push the price up. If you have confidence in ETH, don’t miss out. Buy ETH on Zipmex exchange today!
