Ethereum 2.0 – What we know so far
Ethereum 2.0 was initially expected to have been developed within just 16 months of the Ethereum network’s launch, way back in 2015. As deadlines go, this one missed by some distance. More than 4 years later, it’s still yet to appear. However, after so many false starts and delays, is Ethereum’s upgrade finally heading closer to deployment?
On 4 August, the Ethereum Foundation announced that 2.0’s final and official public testnet, Medalla, had gone live. The launch of the 2.0 network is now tentatively pencilled in for the end of the year. They say good things come to those who wait, but what exactly is Ethereum 2.0 and why should you care? Let’s take a look at the changes we can expect.
What is Ethereum 2.0?
Ethereum 2.0 has been lauded the most ambitious upgrade the cryptocurrency world has ever seen. Never before has a blockchain of the remarkable size and value of Ethereum’s attempted to transition all users, as well as assets, to an entirely new decentralised network while still keeping all operations on the old network active and running.
While, in the near future, few effects will be felt for Ethereum developers and DApps devs, the final phase of development for Ethereum 2.0 is centred around the creation of a separate proof-of-stake blockchain network called the beacon chain.
Ethereum as we know it will eventually be integrated into the Ethereum 2.0 upgrade in its entirety.
(Above: ETH price, protocol upgrades and Ethereum phases of development vs. time. Source: CoinDesk)
At present, Ethereum developers are working through the Serenity Phase 0.
Moving from PoW to PoS
Ultimately, Ethereum 2.0’s main goal sees the network shift from using a proof-of-work (PoW) consensus model to proof-of-stake (PoS), marking a shift toward what many argue is a more efficient and scalable method.
Proof-of-work is a mechanism that validates and records transactions on the blockchain. Through PoW, computer nodes compete to generate cryptographic hashes that satisfy a network-determined level of complexity. In order to maintain security, the complexity level is set high enough to deter anyone from attacking the network as it would be too expensive to operate the required hardware.
One of the biggest hurdles faced by Ethereum (and Bitcoin) is scalability. In order for the network to effectively handle more users and increased functionality, its processing power would need to improve significantly. And that’s the problem with PoW – in its current form, it’s inefficient. Mining with a PoW system requires expensive hardware that consumes a large amount of power.
This is why Ethereum 2.0 says it’s making the switch to PoS. By using a PoS consensus mechanism, the node that records each transaction is chosen by an algorithm. The algorithm assesses how much cryptocurrency the node’s owner holds–the larger the amount, the more likely they’ll be chosen to process and record the transaction. In other words, the node with more “stake” in the crypto is more likely to be chosen. In this way, it’s possible to dramatically decrease the complexity of the cryptographic work, leading to massive throughput gains for the whole network. As each node must stake its own currency to participate, it would remain far too expensive for anyone to attack the network.
Ethereum’s core developers place an important value on decentralisation, which is likely another motivating factor for the move. In recent years, mining of the largest cryptocurrencies, like Bitcoin and Ethereum, have become dependent on a cluster number of large mining pools, exacerbated by the race to have the fastest and most sophisticated mining hardware.
Comparatively, anyone can operate as a PoS validator without any specialist hardware. And the push for efficiency doesn’t stop there; coming soon is a processing technique called sharding.
What is sharding?
Currently, all data added to the Ethereum blockchain has to undergo verification by all participating nodes. This means the processing speed of the entire system is as fast as its slowest participant. This creates a bottleneck which increases transaction costs and decreases throughput.
Sharding is one way through which Ethereum can increase the efficiency of its resource usage, which would have a positive snowball effect. Sharding breaks data verification tasks among sets of nodes and each are responsible for verifying only the data they’ve received. In turn, this allows the whole blockchain to make use of parallel processing, which should increase overall capacity significantly.
Coupled with PoS, the new Ethereum blockchain should be much faster, more efficient, and more inclusive than ever before.
Ethereum WebAssembly (eWASM) to replace Ethereum Virtual Machine (EVM)
The Ethereum Virtual Machine (EVM) is a feature that’s enabled Ethereum to stand out from the crowd of cryptos. The EVM can be understood as an execution environment that runs on all network nodes that facilitate smart contracts. Smart contracts are ultimately what make Ethereum’s blockchain a global computational device. It too is getting a facelift.
Smart contracts on EVM can run games, execute complex financial transactions and even operate social networks. Despite the fact it’s widely used, it still remains somewhat of a mystery. In a bid to demystify the feature, Ethereum 2.0 will begin using a web assembly language in a system they’re calling Ethereum WebAssembly, or eWASM.
This means it would be possible to execute Ethereum app code in today’s ordinary web browsers, making it more widely available to users. It will also allow programmers to choose from several languages like Rust, C and C++ to write code to run on the blockchain. The change is expected to increase the number of programmers in the ecosystem, removing the need to learn a native Ethereum-only language.
What the future holds
While much of the leg-work has been done, there’s still a long way to go before we’re able to interact with the new-and-improved Ethereum 2.0. Most developers agree the biggest hurdle to the rollout will be launching Phase 0, the beacon chain. It’s a core piece of technology upon which the rest of the Ethereum 2.0 system will ultimately live.
Ethereum investors and traders are understandably bullish given the millions of dollars poured into the upgrade. Since Ethereum 2.0 is set to operate as a separate and parallel network to the original Ethereum blockchain, with the launch of Phase 0 comes a new token, ETH2. For ETH holders interested in staking, this migration presents an opportunity to be more active with your ETH in the first stage of the Ethereum 2.0 rollout. But there’s no action needed to transfer ETH tokens from 1.0 to the 2.0 chain. Ethereum 1.0 will simply become part of the 2.0 chain.
Examining exactly just how robust the new network will be – be it on withstanding attacks and malicious activity or increased network speeds – will only really be possible some time after its launch. No blockchain has ever switched from a PoW to a PoS system. This will be an historic case study on both systems and it will take place right before our very eyes.
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