Ethereum 2.0: the next economic shift
Ethereum 2.0 is a system upgrade designed to provide scalability and security through a number of changes, the most important of which is the transition to Proof of Stake, instead Proof of Work.
Why do we need Ethereum 2.0, and what happens next
Ethereum 2.0, also known as Serenity, is a serious update to the Ethereum blockchain. Serenity is created to address the speed, efficiency and scalability issues of an existing chain so that more transactions can pass through Ethereum without delays and costly fees. The update will run in several stages and the whole process is due to begin later this year.
What will be the changes? The most important thing is Ethereum going to Proof of Stake. This transition has been something the community has been talking about for quite some time. Currently Ethereum operates on the same algorithm as most known networks — Proof of Work. This means miners use their powers to compute and solve mathematical problems and verify transactions passing through the network, and are rewarded — in this case — in ETH coins. This process works, but it takes a lot of processing power to maintain it.
Proof of Stake, on the other hand, differs in that instead of miners, now act validators, which delegate cryptocurrency to stacking, which will allow processing of new transactions. Validators are chosen from people who own cryptocurrency, depending on how much they delegate to the stacking, and how long this has already been happening. Proof of Stake is much more economical than traditional mining. Stacking does not require both financial investments and energy costs.
Why Scaling Is Important for Ethereum
Currently, the Ethereum blockchain can support about 30 transactions per second. Because of the abundance of programs working with Ethereum and the overall popularity of the network, this limit creates congestion. Upgrade is designed to address this problem and offer a throughput of 100,000 transactions per second, which of course sounds more developed.
The update consists of three main stages. Phase 0, the very first in this process, will bring us the creation of Beacon Chain. Beacon Chain exists for storing and managing the validator registry and deploying Proof of Stake. The “old” Ethereum will still run in parallel to ensure no interruptions in the data stream.
According to the ETH Foundation, this phase is due to begin on December 1. However, a launch can only happen if there are 16,384 validators on the network by November 24, each delivering 32 ETH — a pretty big investment for most users. But it didn’t happen, which put the launch in question.
The ETH2 deposit contract has also already been released, giving all Ethereum 2.0 engines a start.
The deposit contract is the main step towards the release of Phase 0. To upgrade to ETH2, users will need to start delegating to the stackin. To do this, you need to transfer funds from the old network to the new This is where the deposit agreement is needed. Once the conditions are met, Ethereum 2.0 is ready to go. By the way, you can follow how funds are accumulating through a Twitter account.
What will be the future of Ethereum
Ethereum 2.0 is a very big step for the Foundation, ETH users, services and more. The developers state that more research, even more assessments and even more progress will be done over the next few years.
Many, of course, reflect on how ETH2 will affect the price of Ether. The scalability that the upgrade promises definitely means more use. Commissions will decrease, transactions will become faster, and the network will ensure smooth operation for those who use it, and experts are optimistic about the future of Ethereum. It is hoped that the update will still pass.