By admin

January 23, 2024

ETHEREUM 2.0

Ethereum (ETH), the world’s second most popular blockchain platform after Bitcoin (BTC), wants to be everything its predecessor is not. Some of Bitcoin’s constraints, such as the former’s emphasis on a proof-of-work (PoW) consensus mechanism and overall lack of scalability, are holding Ethereum back. 

  

The multi-phased Ethereum upgrade, which includes the Beacon Chain, Merge Chain, and Shard Chains, aims to improve the Ethereum network’s scalability and security by modifying many core components. The change from a proof-of-work (PoW) consensus approach to a proof-of-stake (PoS) model is the most prominent, with both presenting different variances in the protocol.

What is Ethereum 2.0?

Ethereum 2.0, often known as Eth2 or “Serenity,” is a blockchain update. The upgrade intends to improve the Ethereum network’s speed, efficiency, and scalability so that it can avoid bottlenecks and handle more transactions at the same timeIts major goal is to enhance Ethereum’s transaction throughput, cut costs, and make the network more sustainable. To do this, Ethereum’s consensus method will be switched from proof-of-work (PoW) to proof-of-stake (PoS) (PoS).

 The most major feature in Ethereum 2.0 is Proof of Stake (PoS), which alters the crypto-economic incentive system for certifying the network. A Proof of Work (PoW) consensus method underpins Ethereum’s present design.  

Journey of Ethereum 2.0

Eth2

Graphic courtesy of SCN  

Merge: An upgraded version of Ethereum

The merge, formerly known as Ethereum 2.0, is an improved version of Ethereum.Staking on the Ethereum blockchain employs a proof-of-stake consensus technique to validate transactions. 

Ethereum’s staking method substitutes the proof-of-work concept, in which cryptocurrency miners employ powerful computers to solve difficult mathematical equations known as hashes. To authenticate Ethereum transactions before they are published on the public blockchain, the mining process consumes a growing amount of power. 

 Proof-of-work systems consume enormous amounts of power. Bitcoin mining, for example, now requires 127 terawatt-hours of power each year (TWh). That is currently more than the entire country of Norway’s power use. Ethereum had an approximately yearly power usage with proof of work.

Key Features of Ethereum 2.0

  •  Ethereum 2.0 marks the adoption of a new “proof-of-stake” consensus methodology. 
  • When compared to the prior proof-of-work paradigm, proof-of-stake provides for quicker transactions and reduced costs.
  • The proof-of-stake architecture enables Ethereum holders to “stake” their assets into “stake pools,” which collect rewards and expand their holdings over time.
  •  Ethereum 2.0 will use a technique known as sharding to significantly enhance transaction speeds, perhaps scaling to 100,000 transactions per second or more.
  • The present transaction cost on Ethereum’s network is prohibitively expensive, preventing many people from adopting it. If this update is effective, the lower prices will make the network more accessible to typical customers.

Proof of Work vs. Proof of Stake 

  • Proof-of-Work  Proof-of-Stake 
    PoW (Proof of Work) is a special protocol aimed at defending against cyberattacks such as DDoS (Distributed Denial of Service Attacks).  Proof of Stake (PoS) is a type of consensus mechanism used to verify transactions on a blockchain. 
    A hacker would need to gain at least 50% of total computing power to perform a 51% attack.  Hackers must own at least 50% of all cryptocurrencies on the same network, which is impossible. 
    The mining probability depends on the computational work done.  The effectiveness of new blocks depends on the bet size. 
    Miners are 

    rewarded for solving complex cryptographic problems. 

    		 The validator does not receive a block reward. Instead, they only collect network fees as their reward. 
    Requires powerful and modern mining hardware.  A server unit is required for efficient processing. 
    PoW is the original cryptographic consensus mechanism that appeared long before PoS.  PoS is derived from PoW, but with some improvements. 
    All nodes are included in the transaction for better scalability.  The entire network is not involved in validating every transaction. 

     

What’s the difference between Ethereum 2.0 and Ethereum

  1. Changes to the Consensus Mechanism
    Since switching to the PoS mechanism late last year, the Ethereum blockchain randomly selects ETH holders. Selected owners (validators) are given the responsibility of hashing new blocks.
    You must wager at least 32 ETH to become a validator. Holders with low balances who still want to participate can join the staking pool.In order to protect the blockchain from fraud and scams, validators who discover fraudulent transaction verifications face reduced stakes. This process is called slashing.The PoS mechanism is not only sustainable, but also contributes to making Ethereum 2.0 more decentralized than older Ethereums. Since users no longer need to buy expensive rigs, anyone with a certain amount of her ETH can participate in her token mining. 
  2. ShardingAnother key update that distinguishes Ethereum 2.0 from classic Ethereum is sharding.Sharding is a common phenomenon in the general programming world, where data is spread across multiple machines to speed up processing. Similarly, for Ethereum, 64 shards were introduced.

    Each shard is essentially a new chain that connects to the old Ethereum chain and ties it to previously recorded data. Moreover, everything works the same as the old one, except that the workload is spread across multiple databases.

    Sharding directly addresses Ethereum’s scalability problem. Unlike its predecessor Ethereum, which could only handle 15 transactions per second, Ethereum 2.0 is much more efficient, performing up to 100,000 transactions per second

  3. Beacon Chain

    Ethereum 2.0 is split into 64 different chains and how validators are selected to add new data blocks to them. But there needs to be something that connects each of these chains and decides who is chosen as the validator, right? This question leads to the final big difference between ETH and ETH 2.
    All 64 shard chains are connected to a blockchain that controls them all and allows transactions across the network. This central component is the brain of the entire ecosystem and is called the Beacon Chain.
    Another important function of the beacon chain is to randomly nominate the next validator and monitor its activity. It is also responsible for lowering stakes if exploit attempts are detected. Randomness in validator selection is important to ensure that the system is not biased towards any particular participant.

Conclusion

Ethereum 2.0 has been long-anticipated and much discussed in the blockchain ecosystem. Proof of Stake and sharding will bring considerable improvements to scalability, security, and accessibility. For ETH holders, Ethereum 2.0 provides a new opportunity to participate and receive rewards for maintaining the network. 

 Ethereum 2.0 is a step in the right direction. All the updates it brought after years of continuous hard work are a testament to the dedication of the Ethereum team. As far as the value goes, the upgrade has made Ethereum’s foundations in the crypto market even stronger. It should give the ETH token a positive boost over the long run. Stay tuned for more changes to come, and watch how Ethereum tackles future challenges. 

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