Ethereum POS: What’s Next?

After over two years of planning, testing, and executing, the highly anticipated event in web3, the Ethereum merge, has finally happened.

In the early hours of Thursday, 15 September 2022, the last block, block 15537393, was mined by F2pool. Ethereum's proof of stake (POS) consensus mechanism, known as the Beacon Chain, which is environmentally sustainable, merged with the execution layer and took over the public blockchain transaction validation process.

While the merge seems to be completed, Vitalik Buterin, the co-founder of Ethereum blockchain, already said that the merge is just half complete. He said during the Ethereum community conference in Paris that the merge will only be 55% complete after the blockchain transition to POS. And for the blockchain to reach full capability, there are four milestones to cross.

What are these milestones? Let's check them out

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What's Next After the Ethereum Merge?

Yes! The merge has helped Ethereum shift from the power-hungry proof of work (POW) consensus mechanism to POS, and it has reduced Ethereum’s energy usage by 99.99%. But you should know that this is just the first step to a thousand miles — Ethereum still has a long way to go.

For the blockchain network to reach full capability, it must go through some phases and upgrades. In this section, let’s discuss the four stages Buterin mentioned in the roadmap during the conference.

1. The Surge Phase

The surge will deal with Ethereum's scalability problem. This post-merge stage will focus on making the network more scalable by enabling the creation of layer2 companion products like roll-ups and shards.

The primary focus of the surge will be to increase the network speed and reduce network congestion. The Ethereum development team will work on the development of two companion products (Sharding and Rollups) to solve Ethereum's scalability problem.

What are Shardings and Rollups?

• Sharding

Sharding is a computer science concept that breaks a database into fragments and distributes them across multiple autonomous servers called shards. This scalable data architecture breaks large databases into smaller, faster, and easily managed shards to boost performance, improve data administration, and reduce transaction costs.

During the surge phase, the Ethereum development team will focus on implementing danksharding. Danksharding applies the same concept as sharding but instead of only boosting performance, it also reduces space usage. This new concept is very simple to implement compared to the conventional sharding concept.

The team will work on ways to split and distribute the Ethereum blockchain into different shards to boost performance, reduce transaction costs, optimize space usage, and prevent centralization. The development team will break the Ethereum blockchain into 64 physical shards and each shard will contain its independent states (a unique set of account balances, smart contracts, etc.).

• Rollups

Rollups are hybrid layer2 platforms that create scalability solutions for general-purpose decentralized apps (Dapps) but take advantage of the security of the Ethereum blockchain. These companion products perform transactions on a separate chain and post the transaction on layer1 for transaction verification and validation.

Rollups aims to provide a scaling solution that will improve the total number of transactions that can be processed per second on the Ethereum blockchain. Here are the two types of Rollups the development team could implement during this phase.

Optimistic rollups assume transactions are valid for a certain period and pass it to the base layer. This scaling solution process transactions on the layer2 chain based on the assumption that the transactions are valid. The optimistic rollups verify transactions by implementing dispute resolution mechanisms that detect fraudulent transactions and verify fraud proofs.

When fraudulent transactions are detected and actors submit proofs, the established dispute resolution mechanism verifies the fraud proofs, and if the transactions are fraudulent, the bad actor will be disincentivized. Conversely, if the transactions were valid, the actor that provided false fraud proofs will be disincentivized.

ZK rollups also run on layer2 chains but don’t assume transactions are valid like optimistic rollups. This type of rollup uses a zero knowledge-proof (ZK) cryptographic mechanism to prove the validity of a transaction before submitting it to the layer1 blockchain. These rollups only need you to show control of the key instead of revealing the security information.

The ZK Rollups prove the validity of transactions with no parties needing (the verifier and the prover) to exchange any core information, like passwords or anything that can compromise either side. To prove the validity of a transaction, the rollups verifier challenges the transaction prover to complete a series of puzzles, which can only be solved if you provide the necessary information.

2. The Verge Phase

To further solve Ethereum's scalability problem, the development team will work on a concept to optimize storage and reduce node size. Here, the team will introduce the Verkle tree, an upgraded version of the Merkle tree.

Merkle tree is a hash-based formation that encodes blockchain data more efficiently and securely. This computer science concept is used for data synchronization and verification. It summarizes data in different related transactions and reduces the amount of data the nodes need to maintain.

Whereas, a Verkle tree is an upgraded version of the Merkle tree, which has a proof size efficiency. Unlike the Merkle, which needs around one kilobyte of data, the verkle tree requires less than 150 bytes to produce a proof for a tree with more than a billion data points, so it reduces node size. Also, verkle trees allow you to store a large amount of data by showing a short proof, which will be verified by someone who has the root of the tree.

Implementing the verkle tree will improve the transaction validation process. It’ll also make it easier and faster to set up nodes because validators don’t need to download and store extensive amounts of data to participate in the validation process. And this will further decentralize the Ethereum blockchain.

3. The Purge Phase

At this stage, the Ethereum development team will work on streamlining storage and reducing network congestion to make Ethereum validation process more efficient for the validators. Like during the surge phase, the team will also work to optimize space. But here, they’ll focus on reducing the hardware space needed by validators instead of reducing the node size.

This upgrade will simplify the Ethereum blockchain protocol by purging it of excessive historical data. Here, the team will implement concepts that will remove the need for Ethereum nodes to store technical debt and historical data, which will increase the number of transactions that can be processed by a second.

After this phase, the hardware requirement for setting up an Ethereum node will be reduced and the Ethereum blockchain will be capable of processing up to 100,000 transactions per second.

4. The Splurge Phase

According to Buterin, this phase is referred to as the “fun part”. Here, the tough work of making the Ethereum blockchain scalable and efficient will be completed. The development team will only focus their efforts on making sure the network continues to run smoothly.

The splurge phase is just to ensure that the network works smoothly and as intended. The team will monitor and streamline the development process and ensure that all the roadmaps are completed successfully. They’ll have to implement miscellaneous smaller upgrades and update processes and concepts.

Wrapping Up

Some minutes after 3 am UTC on September 15, the Ethereum community made history—the Ethereum blockchain transition from POW to POS. While most people believe that most of the work is done, the merge is just the first step (which is usually the hardest) to the final destination. There is so much to look forward to in the ecosystem.

Although we don’t know when these upgrades (surge, verge, purge, and splurge) will be implemented, we believe they’ll be in the long haul. And when they finally come, we believe they’re going to be historical like the merge.

Lead image by Bybit via Flickr