Decoding The Buzz Around Ethereum 2.0
Posted By : Priyansha Singh | 16-Jan-2023
Everything You Need To Know About Ethereum 2.0
Ethereum has predominantly earned a much larger name in the blockchain landscape, with a series of developments and incidents to mark both significant positive implications and challenges. The most critical change that happened in the mid of September 2022 was undoubtedly the transition from the Proof-of-Work (PoW) to the Proof-of-Stake (PoS) model, which aims to further enhance the scalability and security of the blockchain network. Now, as we move ahead with the neoteric shift, the process is eventually completed, and Ethereum has finally moved to the much-awaited PoS model.
These changes and updates come under ‘Ethereum 2.0’ – an all-inclusive term that denotes Ethereum’s next evolution into a more accessible and better-performing blockchain network. It covers several improvements to the Ethereum network, which comprehensively tackles some of its major challenges and pressing technical hurdles. Ethereum 2.0 or ETH2 is an informal name that the Ethereum Foundation prefers to refer to as the consensus layer and ETH 1.0 as the execution layer.
Moreover, it is interesting to note that the update also entails sharding, which allows transactions to be simultaneously processed across smaller chains, thereby resulting in much faster transaction speeds.
In this blog, we will shed some light on Ethereum 2.0 including its significance and benefits. We will also discuss the role it plays in the PoS shift, so, let’s get started.
Understanding The Changes That Ethereum 2.0 Will Bring
The Ethereum network has witnessed a considerable level of bottlenecks, mainly because of the sheer activity on it. For instance, let’s take a look at the gas fees which is paid to the miners for their work. It oftentimes reaches extraordinarily high levels, hence causing some setbacks to the overall mining process. With Ethereum 2.0, it can improve as validators who stake Ether will be responsible for maintaining and securing the network. As a part of the high bargaining barrier for entry, there are alternative ways for those with relatively smaller Ether holdings or those who are technically unaware to join in.
In addition to this, the PoS model is more eco-friendly and faster as compared to PoW since it consumes far less power. It is anticipated that PoS will amplify the network’s scalability and reduce its energy usage by a massive margin of 99.95%.
In the existing landscape, the network can handle up to 25 to 30 transactions per second, however, ETH2 promises to handle more than 100,000 transactions per second. This level of scalability will be attained via the implementation of the sharding technique. This change will essentially see 64 ‘shard chains’ that will be put to use, running through transactions in parallel. Theoretically, it is 64 times faster in recording transactions as compared to the current Ethereum network.
Furthermore, with sharding and proof of stake model, Ethereum has indubitably completed the biggest transformations in history. It is because of these facts that top market analysts and industry experts are applauding the transition as it will have an immense impact on the operation of several niches, and one of them is decentralized finance (DeFi).
What Happens To Ethereum After The Adoption of Ethereum 2.0?
It is critical to know that Ethereum’s initial steps towards architecting ETH2.0 commenced in December 2020. This is the time when the entire project began running on two parallel blockchains, the Beacon Chain and the Ethereum Mainnet.
The Mainnet was the legacy blockchain that worked on PoW while the new Beacon Chain functioned on PoS. After almost two years, the Merge came that combined these two blockchains into a single system, marking 15th September 2022 as ETH 2.0 release date.
Please note that the Merge is only a part of Ethereum 2.0’s launch. The next steps would propel developers to introduce ‘sharding’. As discussed above, this is a process where Ethereum’s operations will be extended and spread over 64 chains, instead of a single chain. Also, sharding makes it easier to run a node as each computer would need to store lesser data to run and function.
Ethereum has a multitude of planned phases for improvement including:
Also Read: What Transformations Will Web3 Bring In The Travel Industry?
What Will Come Next In The Future of Ethereum 2.0?
According to many blockchain analysts, Ethereum 2.0 has proven to be a necessary upgrade that will positively impact Ethereum’s overall future. In its current state, users pay extremely high amounts as gas fees, experience slower transaction rates and validation times, and use eye-raising levels of energy during the process.
Subsequently, basic transactions on Ethereum are not the only factors that are affected by the network’s dearth of scalability. These incessant problems also affect non-fungible tokens (NFTs) and segments of decentralized finance (DeFi) such as borrowing, loaning, or lending. For instance, creating and trading NFTs on Ethereum can cost anywhere around hundreds of dollars in gas fees because of the network’s congestion.
With Ethereum 2.0’s launch, the network will immediately embrace benefits and experience efficiency in basically every aspect. Minting and trading NFTs on Ethereum will be relatively much cheaper because of sharding and the PoS consensus algorithm. Ethereum blockchain developers will have an unchallenging time in compiling smart contracts and building DApps, thanks to eWASM implementation. Since eWASM is designed in accordance with the World Wide Web standards, getting in-browser support for Ethereum lite users will be comparatively easier.
Finally, Ethereum’s strategic switch to proof-of-stake will make all the viable differences. It will make the network more accessible, scalable, robust, and secure than ever before while having a minimal environmental impact.
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Her expertise lies in creating insightful and engaging content for the readers and has worked on multiple projects such as Blockchain, IT, Marketing, Home Decor, AI, and many more. She is a trained pianist, painter, and an avid reader.