Various renovation work is currently underway on the Ethereum network under the Serenity upgrade. Higher, faster, further: That is the goal of Ethereum 2.0. Until then, the crypto space will have to be patient.
Hardly any other blockchain project is expected with as much anticipation as Ethereum 2.0. The switch to the proof-of-stake consensus procedure promises to finally solve the scaling problems of Ethereum and to make the vision of a world computer a reality. With phase 0, the first development phase has already started successfully. Ether enthusiasts will still have to be patient until Ethereum 2.0 is finalized.
The most far-reaching turning point in the transition to Ethereum 2.0 is the switch from Proof of Work to Proof of Stake. In contrast to the proof of work, it is no longer miners but validators, also known as stakers, that secure the network. For this purpose, validators first deposit a stake of 32 ETH, in Ethereum jargon “Stake”. This gives them the right to process transactions and create new blocks.
The stake serves both as an investment and as security. If validators do not adhere to the rules, they will be penalized by the algorithm and lose their work. In return, honest validators receive returns on their stake. The more validators ultimately participate in the network, the more decentralized and more secure it will be against attacks.
The new consensus procedure is currently being tested in phase 0 of the major 2.0 upgrade on the Beacon Chain, a kind of sandbox environment that runs parallel to the Ethereum mainchain. With currently over 66,000 validators, who, according to beacon chain, have already staked 2,132,132 ethers, the equivalent of more than 2.7 billion US dollars, the staking process is already meeting with brisk demand. Almost 20,000 validators are also still on the waiting list.
The carrot-and-stick practice seems to be bearing fruit. As Ethereum developer Ben Edgington explains in a blog entry, until January 15. only 36 validators were penalized. A tiny percentage of 0.06 percent of all validators. Since fair rules still apply during the test phase, the validators were only deducted 0.6 ETH from their stake.
However, during phase 0, validators cannot yet migrate their stake off the beacon chain. Validators can only transfer their ethers to the Eth2 chain in phase 1, when the Eth2 chain is also active in addition to the PoW-based Eth1 chain.
The transition to phase 1 takes place with the introduction of the sharding function and, according to a blog entry by Ethereum developer Danny Ryan, is planned for the second half of 2021. With sharding, the beacon chain is initially extended by 64 shard chains. By splitting the processing of transactions over several parallel chains, the transaction throughput increases significantly — an essential key to solving the scaling problem of the Ethereum blockchain.
As soon as sharding has been introduced, Ethereum is already heading for the final phase and thus the final transition to Ethereum 2.0. According to Danny Ryan, “the mainnet will be docked to the proof-of-stake system, which is controlled and coordinated by the beacon chain.” The separate levels will finally be united and smart contracts will also be integrated into the proof-of-stake-based Ethereum 2.0 network.
But although the Eth2 development is on the roadmap schedule, Ryan is dampening expectations of a too hasty transition:
One of the necessary criteria for merging is time. The beacon chain must run in production for a sufficient period of time to demonstrate its stability and robustness.
With the Ethereum network unwinding hundreds of billions in assets, “the path to improving its core consensus (though radical in scope) must be conservative and iterative in rollout.” Ethereum mastermind Vitalik Buterin has also given the project a few years until the final changeover.
Nevertheless, the first results already suggest where the journey could go. And this takes the Ethereum network to unimagined heights, or as Ryan puts it figuratively:
If Proof-of-Work is the rocket ship that shoots Ethereum out of the Earth’s atmosphere, then eth2’s Proof-of-Stake Becon chain is the permanent space habitat to which the rocket will eventually dock for a sustainable and spacious home Find.
So buckle everything up.
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