Ethereum 2.0

Ali Zahi / January 17, 2022

5 min read

Eth2 refers to a set of interconnected upgrades that will make Ethereum more scalable, more secure, and more sustainable. These upgrades are being built by multiple teams from across the Ethereum ecosystem.

The Ethereum 1.0 protocol launched in 2015 as just like a proof of concept of what's a blockchain capable of, the real plan has always been Ethereum 2.0 since day one.

Ethereum 2.0 is decentralized effort, there's not a silicon valley based company sitting there building Ethereum and just ship it to us, that's not what decentralization means in the first place, it's built and maintained by an open source community and whenever they want to upgrade the blockchain they publish this open source software and the only upgrades that's actually accepted are the ones that the people who run the blockchain (miner, validators) download and there's consensus on this which is in the in incentives of people who run the network not just the incentives of the people who create it.

Right now if you're using Ethereum you're using Ethereum 1.0. we're now are in a multiphase upgrade to the long-term vision for Ethereum, the roadmap for Ethereum was to get it out, get it working and get users and then upgrade it to be Ethereum 2.0.

Goals

1. Ethereum needs to support 1000s of transactions per second, to make applications faster and cheaper to use.
2. Ethereum needs to be more secure. As the adoption of Ethereum grows, the protocol needs to become more secure against all forms of attack.
3. Ethereum needs to be better for the environment. The technology today requires too much computing power and energy.

Phase 0

Creating the Eth 2.0 beacon chain, the beacon chain is separate chain operating alongside the Eth 1.0 blockchain and that's where proof of stake is "currently" working, "currently" you can stake Eth 2.0 but you will have to transfer it to the beacon chain and you can't get it back until the merge of the beacon chain with Eth 1.0 happens.

Phase 1

The next milestone on the roadmap...

The merge of the Eth 1.0 "the mainnet" and the beacon chain, and now everybody who is using Ethereum will be using a proof of stake blockchain instead of the proof of work blockchain which is basically replacing miners with validators and Eth will be deflationary.

Ethereum now handles 15 transactions per second, which is relatively slow in the context of financial transactions. proof of stake, on the other hand, is expected to enable the processing of 100,000 transactions per second.

Phase 1.5 / Phase 2

The main limitiation of Ethereum scalabillity right now is that every single node on the block has to keep a copy of all the transactions, so everybody has to do everything.

Sharding

Shard chains spread the network's load across 64 new chains, sharding introduces a blockchain of blockchains so whenever a new transaction is sent it doesn't have to travel through the entire network it can be in an individual shard and they're themseleves in consensus to the state of the entire blockchain. (Shard chains are not responsible for handling transactions or smart contracts, just storing data...)

The current Ethereum chain will be one of the shards and this is the only shard that's able to handle transactions and smart contracts.

Slashing

Instead of machines securing the network by investing computing power, the proof of stake consensus model relies on Eth, users will have to stake 32 Eth in order to become validators and they will recieve both, the block reward and the transaction fees, to prevent validators from trying to play with the system and validate fradulent transactions or going offline the proof of stake system implements a mechanism called Slashing where validors lose some of their staked Eth if they didn't behave as expected, the penalty escalates based on the percentage of validators who didn't behave as expected at the same time.

Layer 2 Scaling

Rollups, Plasma, Channels, Sidechains

Layer 2 itself is built on Layer 1.

Rollups allow for bundling transactions off-chain generating a cryptographic proof and then submit it to the chain, this process is responsible for handling transactions and smart contracts and it only requires the data to be available to store the proof.

Docking

Docking is the step in which the Eth 1.0 chain will be one of the shards in the Eth 2.0 proof of stake, this step will mark the end of the proof of work (Eth 1.0) blockchain and will bring the ability to run smart contacts in the proof of stake system and will provide the full history and current state of Ethereum.

That's currently it for Ethereum 2.0 and I'll update this article if needed.