Ethereum 2.0: An Overview

Ethereum 2.0 will bring about a lot of changes to the Ethereum network. The main purpose of the upgrade is to make the blockchain FASTER (>15tx/sec), and more SECURE (51% attacks, centralization), while also saving energy (as opposed to mining with electricity). But this update will also imply a host of other changes, such as economic changes, which can also be seen as a way of responding to Ethereum’s stubborn critics, who keep pointing out its crucial issues, such as scalability (remember Cryptokitties?) and fees. Ethereum 2.0 shall lead the way for Ethereum to advance both its technological and economic structure in an attempt to better master the challenges of Blockchain in 2020 and beyond, as well as create new opportunities. However, the most important thing to note here is, that Ethereum 2.0 eventually aims to convert the ETH blockchain from Proof of Work to a PROOF OF STAKE mechanism, and introducing shard chains.

Ethereum 2.0 Release – Phase 0: Beacon Chain

It is important to note that we’re talking about a big change here, and that takes time. Not all of the features will be implemented at once, but rather one at a time. Because the project is being worked on in an open source way with many people involved internationally, this process is neither fast nor are there any precise dates to be expected. The timelines and launch dates remain rather rough estimates and depend a lot on the results of testing.

While the beacon chain’s main objective will be to keep the shards updated, at the beginning it will mostly register ETH stakers (‘validators’) and coordinate the staked Ether. But be careful, once you’ve staked your ETH on the beacon chain you cannot withdraw it back, at least until Phase 1.5!

When can we expect Phase 1? The next phase is estimated to go live in 2021 and introduce shard chains. You can check out the entire Ethereum road-map here.

You can check the beacon chain stats here.

Vitalik contributing to Ethereum 2.0

Vitalik Buterin, founder of Ethereum, just recently sent around $1.4 million in ETH to the Ethereum 2.0 contract, which is now totalling at ca. $17 million, according to Coindesk. Furthermore, AMB Crypto reported that events could easily get delayed yet again, due to the great number of 524,288 ETH total needed for staking on the beacon chain by December 1st.      

The transition – Ethereum 1.0 to Ethereum 2.0

 After Phase 0 is complete there will in fact be TWO active Ethereum blockchains: The Ethereum 1.0 chain is the ‘old’ mainnet one as we’ve come to know it (proof of work) and the Ethereum 2.0 (proof of stake, ‘beacon chain’). However, the old PoW Ethereum 1.0 chain will still stay live through Phases 0-2 and PoW validators will still be rewarded, although PoW is gradually disencouraged. And while you can send ETH from the old to the new beacon chain, it’s currently a one way street, so you cannot send it back the other way. 

When will the Ethereum 2.0 release be?

There is  no exact date, however estimates suggest a an Ethereum 2.0 launch of early December 2020.

How long will the mainnet stay proof of work?

The mainnet will continue in the usual proof of work mode (validated by miners) until we reach Phase 1.5, so not anytime before late 2021.

Why is 32 a crucial number for Ethereum 2.0?

Because this is the exact number of ETH one needs to be able to participate in STAKING.

Is there anything I need to do for the ETH 2.0 upgrade?

In short: NO. You do not have to do anything. But if you’d like to participate as a validator via Ethereum 2.0 staking you can do so, by staking 32 ETH (but as mentioned above, this is a one way tx until Phase 1.5!). For the foreseeable future, you don’t have to change anything (including your dApps). If you’d like you can participate in testing and Ethereum 2.0 staking you could also just twiddle your thumbs and wait for the final transition in Phase 2. Either way, as long as you keep your ETH in a secure wallet (read more about wallets here), your funds are SAFU.

Disclaimer: None of this is financial advice. All content on this website and this article is provided for informational purposes only. You must consult your financial advisor first before making any financial decisions. Image Source: Unsplash.com

First appeared on Liquidary by Sophie Weidenhiller