ETH is Now “One Step Closer” to Ethereum 2.0
Ethereum is a popular cryptocurrency. Recently the Ropsten Merge Test upgrade comes with the solutions it used to face in the last few years. The news regarding Ethereum 2.0 has already triggered the butterflies in the stomach of developers, analysts, and investors, who have high expectations regarding the update. In the last few years, it has made various changes in the algorithm and protocol. Here is a brief list of these changes:
Date: Jan-02-2020 08:30:49 AM +UTC
Muir Glacier: It increases the block difficulty in proof of work consensus.
Date: Oct-14-2020 09:22:52 AM +UTC
Beacon Chain: It deploys the staking deposit contract.
Date: Dec-01-2020 12:00:35 PM +UTC
Beacon Chain Genesis: It is the first step toward achieving Ethereum’s vision.
Date: Apr-15-2021 10:07:03 AM +UTC
Berlin: Optimize gas cost for EVM. It supports multiple transaction types.
Date: Aug-05-2021 12:33:42 PM +UTC
London: Introduced EIP-1559. It reformed the transactions and gas fee refunds process.
Date: Oct-27-2021 10:56:23 AM +UTC
Altair: It supports the sync committees, making some valuable changes in algorithms.
Date: Dec-09-2021 07:55:23 PM +UTC
Arrow Glacier: All these updates enhance the block difficulty in the consensus.
Ethereum 2.0 Upgrades
Ethereum uses proof of work consensus. Consensus is a model where a group of people agrees with the changes. On the Ethereum blockchain, they validate the transactions. In this process, everyone uses a high-power computer to solve mathematical calculations. The nodes validate the transactions, and the users reward them.
However, in the process, only one ‘winner’ node validates one transaction, but everyone else uses the energy for running their computers.
In the Proof-of-Stake consensus mechanism, the condition is different. Here the validator is selected depending on their stakes on ETH. In this way, no other validators waste electricity during the process.
The Beacon Chain
It is a Proof-of-Stake mega blockchain protocol that went live in December last year. However, it cannot handle transactions on smart contracts and exist separately from Ethereum’s main net. In short, it is the Ethereum 2.0 upgrade that has been running in parallel with the previous version.
In the last few years, Ethereum faced issues with scalability and slow transactions. Sharding is the solution because it splits the network into smaller pieces that can provide better performance. It allows the accessibility of data so that Ethereum will become one blockchain with the old data, and there will be 63 other blockchains to run the network more efficiently.
Ethereum 2.0 Launch Timing
The Ethereum 2.0 launch is in process, and it will finally be launched in August this year. The upgrade will be completed in phrases.
Phrase 1: Beacon Chain adopts the new proof of stake mechanism. It was done in December last year.
Phrase 2: Introduction of Sharding network, which will be done with an aim to solve the scalability issue.
Phrase 3: It is the Docking and Final Merging process. Here the consensus will switch from proof of work to proof of stake consensus.
Phrase 4: Developers will analyze how it is going and add new updates to the network.
The Goals of Ethereum 2.0
Ethereum is more focused on decentralization, security, scalability, and speed. Ethereum 2.0 (formerly Eth2) update intends to make the network more user-friendly and eco-friendly.
It also improves security, scalability, and decentralization features in the system. However, a major change will be the switching from proof of work consensus to proof of stake consensus, which will replace the old mining system with an ETH staking system. The hardware with the GPU system will be replaced by staking software.
There are many debates regarding the two consensuses, but it is proven that proof of stake offers a more secure and better network in the long run. It means the stakeholders can easily cut the network revenue instead of setting up a large outsourced group of miners. It will open a door for scalability with less power consumption.
Effects of Ethereum 2.0
It will introduce an interest rate in the network, which will be measured by the returns earned from staking Ethereum. It will attract more users and scale the system faster with the aim of a bigger ecosystem. It could be a benchmark of return for Defi yield-earning applications.
In 2022 it also added zero-knowledge proofs and other layer-2 solutions to the network in the final stage of the Ethereum 2.0 upgrade. The introduction of EIP (Ethereum Improvement Proposal)-1559 will burn the transaction fees to control the inflation rate.
Current & Future Roadmap of Ethereum
The recent upgrade will have the following impacts on the Ethereum cryptocurrency.
- Beacon Chain, which was already launched last year, can be used as a consensus engine.
- Roll-ups can be used for scaling computation.
- The switching to proof of stake can be done without impacting the running applications.
Currently, the main net of Ethereum uses the proof of work consensus, while the test net and private networks use proof of authority and proof of stake algorithms.
Ropsten Test Merge
Ropsten is a testnet of Ethereum. The Ethereum 2.0 update will launch on the Ropsten testnet to check its effectiveness. Developers will watch the changes; if they find any bugs, they will fix them. After that, they will launch the version to the Ethereum mainnet without impacting the user experience and decentralized applications.
The update will launch in August, but there is a long list of things left in the next few weeks. Now big investors are accumulating Ethereum for the long term because, after a successful launch, the ETH price will skyrocket in the next five years. According to the Ethereum price prediction, if you are interested in the ETH coin and want to treat it as an asset, it is the right time to buy Ethereum for the long term.
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