Eth2.0: The Road to Innovation for Ethereum

Ethereum is facing an increasingly urgent dilemma – as network activity surges, Transaction Cost is skyrocketing, and the scalability bottleneck is becoming more apparent. Each transaction requires a hefty gas fee, making many applications on Ethereum no longer economically viable. To address this predicament, the long-anticipated upgrade plan from the Ethereum community has finally surfaced – this is the highly awaited Ethereum 2.0 (also known as Eth2 or “Serenity”).

Why does Ethereum need an upgrade?

Since the advent of Ethereum, decentralized applications (DApps) and blockchain technology have thrived in its ecosystem. Particularly in the wave of innovation in decentralized finance (DeFi), a large number of applications are built on Ethereum. However, this growth has also brought challenges.

The proof-of-work (PoW) consensus mechanism adopted by Ethereum is secure and reliable, but as the network transaction volume expands, the required computing power also increases exponentially. This leads to slower transaction speeds and skyrocketing fees, ultimately making it difficult for Ethereum to become the ideal platform to support the next generation of internet applications.

Three Core Innovations of Eth2.0

Ethereum 2.0 addresses the scalability crisis through three revolutionary reforms while ensuring that the network's security and decentralization properties are not compromised.

Transition of Proof of Stake Mechanism

Unlike Proof of Work (PoW), which relies on the computing power of miners, Proof of Stake (PoS) introduces a brand new validation logic. As long as you hold at least 32 Ether, you can choose to stake these tokens to become a validator, earning rewards by validating transactions. This not only significantly reduces energy consumption but also allows ordinary users to participate in network maintenance, truly realizing a democratized consensus mechanism.

Application of Sharding Technology

Currently, each node needs to store and process the entire transaction history on the Ethereum network, which causes huge data redundancy and processing bottlenecks. Sharding will break down the network data into multiple subsets, with each node only needing to manage one shard, allowing for parallel processing of a large number of transactions and significantly improving the overall throughput and efficiency of the network.

the coordinating role of the beacon chain

To ensure data consistency and synchronization between shards, the beacon chain was born. It acts as the “coordinator” of the entire network, providing consensus and security guarantees for the parallel operation of each shard chain. Without the beacon chain, data sharing between shards would be impossible. Therefore, it is regarded as a top priority for the launch of Ethereum 2.0.

Phased Roadmap from Reality to Ideal

The implementation of Eth2.0 is carried out in a phased manner to ensure that each phase can be executed safely and stably.

Phase 0: Launch of the Beacon Chain

The core of this stage is the deployment of the beacon chain. Although there is no shard chain yet, the beacon chain begins to accept validators for staking through one-way storage contracts. It is important to note that until the shard chain is fully online, all staked Ether will be locked, and validators will not be able to withdraw.

The Beacon Chain officially launched on December 1, 2020, operating in parallel with the Ethereum mainnet. During this period, it did not process mainnet transactions but instead accumulated experience by continuously reaching consensus on active validators and their account balances.

Phase 1/1.5: Integration of Sharding and Handoff of Proof of Stake

Phase 1 introduces sharding chains, allowing validators to create blocks on the blockchain through the PoS mechanism. Phase 1.5 marks the official integration of sharding chains into the Ethereum mainnet and the initiation of the transition from PoW to PoS. These two phases were initially planned to commence in 2021.

Merge: A Transformation from Energy Consumption to Elegance

“The Merge” is the final step from Proof of Work to Proof of Stake, and a key milestone in the advancement of Ethereum 2.0. At this moment, the Ethereum mainnet will fully migrate to the Beacon Chain, adopting a comprehensive PoS consensus mechanism.

Unlike hard forks, merging does not create two independent blockchains. Ethereum will maintain a single blockchain identity, and all users' transaction histories and asset records will be fully preserved on the mainnet, with no need for users to take any precautionary measures.

Phase 2: The Birth of Complete Sharding

The final phase will achieve a fully formed sharding architecture, and Ethereum 2.0 will officially become the next generation of Ethereum. At that time, the sharding chain will also support smart contracts, allowing DApp developers to collaborate seamlessly with Eth2.0, opening a new chapter in the application ecosystem. This phase is expected to be launched after the merger.

Outlook: Why This Upgrade is Crucial

Eth2.0 is not just a technological iteration, but a matter of life and death for the Ethereum ecosystem. The improvements in scalability will enable Ethereum to support more applications and users, solidifying its leading position among smart contract platforms. The implementation of new features such as PoS, sharding, and the beacon chain will ensure that Ethereum continues to serve as the most vibrant and sustainable infrastructure in the cryptocurrency ecosystem.

Although the complete launch of Eth2.0 will take a considerable amount of time, possibly exceeding the expected timeline, the Ethereum developer team is steadily advancing this grand plan. With the gradual implementation of each stage, Ethereum will usher in a true new beginning.