What is Ethereum 2.0?
Ethereum 2.0, also known as “Eth2” or “Serenity,” is the next update to the Ethereum blockchain.
The upgrade aims to boost the speed, efficiency, and scalability of the Ethereum network so that it can process more transactions and relieve pressure on the network.
Ethereum 2.0 will be launched in several phases, and the first upgrade is expected to be launched at the end of this year, 2020.
How is Ethereum 2.0 different from current Ethereum?
Current Ethereum uses a consensus mechanism known as a Proof of Work (PoW) or mining mechanism, while Ethereum 2.0 uses a Proof of Stake (PoS) mechanism.
The difference is not only in this point, but in many other features, such as the difference in the ability to expand, the speed of transactions, and reduce pressure on the network.
How is the proof of stake mechanism different from the proof of work mechanism?
With blockchain networks like Ethereum, there is a need to validate transactions in a decentralized manner.
Ethereum currently uses a consensus mechanism known as Proof of Work (PoW) like that used by Bitcoin and other cryptocurrencies.
In this mechanism, miners use the processing power of computers to solve complex mathematical puzzles and verify new transactions.
Miners add new transactions to the blockchain record after verification, to join the chain of previously existing transactions, and then these miners are rewarded with cryptocurrencies.
Bitcoin mining can be an electrically consuming process.
While the mechanism of proof of quotas (PoS) differs from the aforementioned mechanism in that the quota process does not use powerful computer equipment. Rather, holders of the cryptocurrency use their currencies in order to verify the transaction.
These auditors are chosen to suggest a block based on how much cryptocurrency they have and how long they have held it.
Other auditors can then certify the validity of the block and add it to the blockchain network after it has obtained enough certificates from the coin holders, after which the auditors are rewarded for the successful block proposal.
The main advantage of PoS is that it is more energy efficient than PoS.
This means that not much computing power is required to secure the blockchain network.
What are the reasons that would make Ethereum 2.0 better than the current Ethereum (1.0)?
One of the main reasons for upgrading to Ethereum 2.0 is its scalability.
With the current Ethereum 1.0, the network can only support about 30 transactions per second, this causes delays and congestion.
Ethereum 2.0 promises up to 100,000 transactions per second.
This increase will be achieved through the cutting chain mechanism.
How will Ethereum 2.0 be safer?
Ethereum 2.0 was designed with safety in mind.
Most proof of quota networks have a small group of validators, which makes the system more centralized and the network security low.
Ethereum requires a minimum of 16,384 auditors, which makes it more decentralized and thus increased security.
According to Lior Yaffe, the co-founder of Jelurida and the main primary developer of the Ardor and Nxt blockchain, there is a potential vulnerability that focuses on the level of engagement rates in the network.
Ethereum 2.0 security audits are performed by several organizations including the blockchain security company Least Authority.
The Ethereum Foundation is creating a dedicated Ethereum 2.0 security team to research potential cybersecurity issues.
In a tweet, researcher Justin Drake on Ethereum 2.0 stated that the research will include searching for confusion, looking for rewards, modeling the cryptocurrency, analyzing applied cryptography, and formal verification.
https://twitter.com/drakefjustin/status/1289656431927611398?s=19
How will Ethereum 2.0 upgrade?
After a series of previous beta upgrades launches of “Topaz, Medalla and Spadina” Ethereum 2.0 will be fully rolled out in three phases:
Stage 0, 1 and 2.
Stage 0 begins in 2020, with other phases appearing in the following years.
Phase 0 will see the implementation of a chain called a "beacon", which stores and manages the auditors' registry as well as deploying a Proof of Stake (PoS) consensus mechanism for Ethereum 2.0.
The PoW-based Ethereum network will work alongside the new network, so there is no interruption in data continuity.
The first phase, scheduled for 2021, will see further network integration.
The network is expected to run at 64 bits (allowing for 64 times more throughput than the current Ethereum 1.0) although it will not support accounts or smart contracts at launch.
Phase 1.5, a temporary update scheduled for 2021, will see the Ethereum 2.0 network become the same as the main network and the network as a whole will move to the proof of stake mechanism.
The second phase, scheduled to be launched in 2021-2022, will see the parts become fully functional and compatible with smart contracts.
The second stage also includes adding Ethereum accounts, enabling transfers and withdrawals, and implementation of inter-departmental transfers and contract calls.
The second stage will also allow building implementation environments for scalable applications.
The future of Ethereum 2.0:
Ethereum 2.0 is on the way to launch in November 2020, according to one of the developers in the project, but what will the future hold for the ETH cryptocurrency? How will the impact of the new update on the currency?
Ethereum co-founder Vitalik Buterin has laid out a roadmap for how Ethereum 2.0 will be achieved in the next five to ten years.
https://twitter.com/VitalikButerin/status/1240365047421054976?s=19
Buterin says the bulk of the challenges are increasingly related to developments.
https://twitter.com/VitalikButerin/status/1277961594958471168?s=19
In June 2020, Buterin indicated that Ethereum 2.0 would need to build on existing expansion methods such as “ZK-rollups” for at least two years.
Soon enough we might be seeing providers offering shares for eth PoS (as you forgot to mention the minimum amount to stake which is very high for most common people).