What Is Ethereum 2.0?
February 19, 2021
Ethereum's all-time price highs have made it the darling child of investors and developers. But the network still needs to overcome its growing pains if it hopes to cement its place as the top platform for decentralized applications.
The Ethereum Foundation is poised to roll out a series of fundamental changes to improve transaction times, reduce fees, and clean up the network's environmental output. Over the next two years, the phased rollout of the Serenity protocol will culminate in the launch of Ethereum 2.0. Let's take a look at everything that's in the works.
New to Ethereum? Get the skinny right here to get the skinny before diving in with Ethereum 2.0.
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Proving Proof of Stake
Ethereum currently relies on “proof of work” (PoW) consensus, in which the whole network must agree on the validity of any given block as new coins are issued. Serenity has laid the groundwork for a forthcoming switch to a “proof of stake” (PoS) model, and there are good motivations behind the fix.
In the PoS paradigm, priority is given to trustworthy validators willing to risk their own ether when contributing blocks. If one of their blocks is deemed invalid by a challenger, they lose the staked fund—while the challenger skims off the top.
Even though the proof of stake model requires fewer sign-offs for validation, it may prove even safer from malicious attack than today’s Ethereum. There’s little incentive to create fraudulent blocks when validators have to bet hard-won ether that their contributions are legit.
Reduced Ecological Harm
Proof of work cryptomining needs a lot of juice to go. Large-scale mining firms need to run massive hardware at a fairly constant rate to mint PoW currencies. If that electricity comes from fossil fuel sources, it can lead to disastrous carbon emissions.
Adopting proof of stake could all but eradicate Ethereum’s environmental impact. When you need fewer validators to issue coins, it means fewer machines and reduced transaction times—without the pollution).
Reduced transaction times aren't just good for Mother Earth: these changes are expected to reduce the ballooning price of "gas," Ethereum's built-in fees for network interactions. If validators spend less time and energy doing their part, the fees for hiring out those actions should plummet as a result.
The high cost of gas is a common barrier to entry for startups and private individuals keen to build on the Ethereum platform. Affordable validation means more people at the party when "The Flippening" comes.
Growing to Scale
The Ethereum platform has long contended with mounting transaction fees and irregular processing times, and the recent market dogpile hasn’t helped. The Serenity overhauls are part of an effort to improve Ethereum’s scalability (the ease with which the system can expand without jamming up the pipes).
Birth of the Beacon
December 2020 marked the release of Serenity’s “Phase Zero” and the creation of beacon chain, a kind of proving grounds for proof of stake. Validators who migrate to the beacon chain can now support Ethereum on a parallel network, where they can try to achieve milestone transaction per second rates and see if the proof (of stake) is in the pudding.
Separation keeps the system stable while testing it out. The work done on that isolated data pool—a shard chain—will eventually get added into the continuity of the blockchain ledger. If all goes well, future phases may see the entire ecosystem embrace sharding to reduce network congestion with parallel blockchain segments.
To withstand higher traffic and the hefty data flow it brings, Ethereum’s developers have turned to “rollups” as an interim solution. The process, which bundles transactions off-chain to be incorporated later, may increase transaction throughput by at least a few hundred times.
Rollups are a better solution than raising gas limits per block, but the big shift will come to fruition when the Ethereum we know and love is “docked” onto the beacon chain in Serenity's final phase. When today’s Ethereum mainnet reaches its final form, it will become just another happy shard chain using proof of stake to power its humble little dapposphere.
The Web Renaissance
To hear devs tell it, tomorrow’s applications and servers won’t go down because the distributed computing networks we’re building can only go more mainstream. These next two years might herald a new iteration of the web.
Distributed supercomputers are the obvious solution to financial uncertainty and tech monopolies. We believe home hardware is the next frontier. Networked communities like Salad will soon uplift innovation by providing the support and resources that the best ideas deserve.
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We’re stoked to see how things change for decentralized platforms like Ethereum. Shard chaining and proof of stake are vital improvements that will hopefully entice more people to get involved with blockchain technologies.
In the meantime, we’re pleased as punch to know Chefs are milking mula from the latest bull run.