Smart contracts are already the most popular use of the Ethereum blockchain, but it needs an upgrade. Even though it's been a long time coming, the first phase of Ethereum 2.0 is officially live and operational.
The multi-phased upgrade intends to improve the scalability and security of the Ethereum network by making a number of modifications to the network's infrastructure, the most notable of which is the transition from a proof of work (PoW) consensus mechanism to a proof of stake (PoS) consensus model.
What exactly is Ethereum 2.0, and how does it function?
Ethereum 2.0, sometimes referred to as Eth2 or "Serenity," is an upgrade to the Ethereum blockchain that was released in 2015. As a result of the upgrade, the Ethereum network should be able to improve the speed, efficiency, and scalability, allowing it to accommodate more transactions and eliminate bottlenecks. The Ethereum network is now undergoing an upgrade.
Ethereum 2.0 will be released in parts, with the first upgrade, known as the Beacon Chain, being live on December 1, 2020. Ethereum 2.0 will be released in steps. The Beacon Chain adds native staking to the Ethereum blockchain, which is a critical component of the network's transition to a proof-of-stake consensus process. It is, as the name implies, a blockchain that is distinct from the Ethereum main network.
Known as The Merge, the second phase of the project is scheduled to begin in the first or second quarter of 2022 and will see the integration of the Beacon Chain with the Ethereum mainnet. To become a full validator, you'll need 32 Ether (Eth), or you can join a staking pool with some ETH. Additionally, you'll need to run a 'Eth1' or MainNet client. The launchpad will guide you through the process and the hardware requirements. Alternatively, a backend API can be used.
The final step is called Shard Chains, and it will play a critical part in the scaling of the Ethereum blockchain. In contrast to traditional blockchains, which consolidate all transactions on one single chain, shard chains disperse these transactions among 64 new chains.
This also means that running an Ethereum node is considerably easier from a hardware viewpoint, as there is far less data that needs to be saved on a computer as a result of the reduced amount of data that has to be stored.
Shard Chains aren't slated to be released until 2022, and it's uncertain when that will be.
Compared to Ethereum 1.0, what is the difference in Ethereum 2.0?
Ethereum 1.0 uses a consensus process known as proof-of-work (PoW), but Ethereum 2.0 will use a proof-of-stake (PoS) technique to achieve consensus. Because creating blocks in PoS-secured blockchains consumes far less computing power than in PoW-secured blockchains, PoS is more environmentally friendly.
In what ways are proof of stake and proof of work different from one another?
With blockchains such as Ethereum, there is a requirement for transactions to be validated in a decentralized manner. Proof-of-work consensus is now used by Ethereum, as is the case with other cryptocurrencies such as Bitcoin, to achieve consensus.
In this system, miners make use of a computer's processing capacity to solve complicated mathematical riddles and validate new transactions, which is called mining. The first miner to solve a puzzle adds a new transaction to the blockchain, which is a record of all of the transactions that have taken place. Afterwards, they are compensated with the network's own coin. This technique, on the other hand, can be quite energy-intensive.
A proof of stake system varies from a mining system in that you can stake your eth token and so become validators, rather than miners. They function in a similar way to miners in that they verify transactions and ensure that the network is not being used to conduct fraudulent transactions.
These validators are chosen to propose a block based on the amount of cryptocurrency they have staked and the length of time they have staked it for.
Other validators can then attest to the fact that they have observed a stalemate. An additional block can be added to the blockchain if a sufficient number of attestations are received. Validators are then compensated for their contribution to a successful block proposition. This is referred to as "forging" or "minting" in the industry.
Ethereum 2.0 will be able to process transactions than Ethereum 1.0.
Scalability is a major factor driving the switch to Ethereum 2.0.
Ethereum 1.0 has a maximum transaction rate of 30 per second, which results in delays and congestion. With Ethereum 2.0, the transaction rate is expected to reach 100,000 per second. The installation of shard chains will lead to this growth.
How will Ethereum 2.0 be more secure than its predecessor?
Securing the network is a top priority for Ethereum 2.0's designers. A smaller number of validators in most PoS networks means a more centralized structure and less protection for the network as a whole. Decentralization and security go hand in hand with Ethereum 2.0, which necessitates a minimum of 16,384 validators.
There is a potential vulnerability that focuses on participation rates, according to Lior Yaffe, a co-founder of Jelurida, and main core developer of Ardor and Nxt blockchains.
Cryptocurrency exchange Quantstamp and blockchain security firm Least Authority are undertaking security checks on Ethereum 2.0 code.
The Ethereum Foundation is also putting together an Ethereum 2.0 security team to look into potential cryptocurrency cybersecurity issues.
"Fuzzing, bounty hunting, pager duty, cryptoeconomic modeling, applied cryptanalysis, formal verification" are some of the things Justin Drake, an Ethereum 2.0 researcher, plans to investigate.