WHAT IS ETHEREUM 2.0

What is Ethereum 2.0?

Ethereum 2.0, also known as Eth2 or “Serenity,” is an upgrade to the Ethereum blockchain. The upgrade aims to enhance the speed, efficiency, and scalability of the Ethereum network so that it can process more transactions and ease bottlenecks.
But Eth2 also doesn't totally exist—in January 2022, the Ethereum Foundation said it would stop referring to the upgrade as Ethereum 2.0. The rebrand is intended to reflect the fact that what's been previously referred to as Ethereum 2.0 is a network upgrade rather than a new network. Accordingly, Eth1 is now known as the "execution layer," where smart contracts and network rules reside, while Eth2 is referred to as the "consensus layer," which ensures that devices contributing to the network are acting in accordance with its rules.
However, the name Ethereum 2.0 has stuck.

When is Ethereum 2.0 happening?

Ethereum 2.0 is launching in several phases, with the first upgrade, called the Beacon Chain, having gone live on December 1, 2020. The Beacon Chain introduces native staking to the Ethereum blockchain, a key feature of the network’s shift to a PoS consensus mechanism. As the name suggests, it is a separate blockchain from the Ethereum mainnet.
The second phase, called "the Merge," is expected in the first or second quarter of 2022 and will merge the Beacon Chain with the Ethereum mainnet.
The final phase is shard chains, which will play a key role in scaling the Ethereum network. Instead of settling all operations on one single blockchain, shard chains spread these operations across 64 new chains.
This also means that it will become much easier from a hardware perspective to run an Ethereum node because there will be far less data that needs to be stored on a machine.
The full upgrade to Ethereum 2.0 is expected to take place by 2023, according to the Ethereum Foundation.

How does Ethereum 2.0 differ from Ethereum?

While Ethereum 1.0 uses a consensus mechanism known as proof-of-work (PoW), Ethereum 2.0 will use a proof-of-stake (PoS) mechanism.

How does proof of stake differ from proof of work?

With blockchains such as Ethereum, there is a need to validate transactions in a decentralized way. Ethereum, like other cryptocurrencies such as Bitcoin, currently uses a proof-of-work consensus mechanism.
In this system, miners use a machine’s processing power to solve complex mathematical puzzles and verify new transactions. The first miner to solve a puzzle adds a new transaction to the record of all transactions that make up the blockchain. They are then rewarded with the network’s native cryptocurrency. However, this process can be hugely energy-intensive.

How will Ethereum 2.0 scale better than Ethereum 1.0?

One of the main reasons for the upgrade is scalability.
The current Ethereum network can only support around 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 implementation of shard chains.

Did you know?

The current Ethereum setup has a blockchain consisting of a single chain with consecutive blocks. This is secure but very slow and inefficient. With the introduction of shard chains, this blockchain is split up, enabling transactions to be handled in parallel chains instead of consecutive ones. This speeds up the network and can scale more easily.

How will Ethereum 2.0 be more secure?

Ethereum 2.0 has been devised with security in mind. Most PoS networks have a small set of validators, which makes for a more centralized system and decreased network security. Ethereum 2.0 requires a minimum of 16,384 validators, making it much more decentralized—and hence, secure.

How could Ethereum 2.0 affect Ethereum’s price?

More scalability means more usage, which, in turn, means more demand. Which—at least in theory—should propel the price of Ethereum to new heights.
“By the time ETH 2.0 and rollups work together there will be 100,000 transactions per second capacity. That’ll mean a completely seamless experience for the next billion people,” Jamie Anson, founder of Nifty Orchard and organizer of Ethereum London,