What is Ethereum 2.0?

Ethereum 2.0 is an Ethereum (ETH) network upgrade that offers significant improvements to the network's functionality and experience. Among some of the most prominent and important upgrades, we can say the transition to Proof of Stake (PoS), partitioned chains and the addition of a new blockchain called beacon chain to the center. In addition, since the launch of Ethereum, it is possible to say that the development of new technologies and other blockchains in the form of decentralized applications (DApps) has greatly increased. More importantly, most of these technologies are networks built on the Ethereum network. For example, a significant portion of the largest Decentralized Finance (DeFi) innovations is based on Ethereum.

Unfortunately, scalability problems have arisen. As the number of transactions on the Ethereum network increases, the cost of processing these transactions increases at the same rate (paid in Gas). As a platform that aims to lead the next generation internet, Ethereum's economy should also be suitable for this. Otherwise, it will become more difficult to use the network.

This is where Ethereum 2.0 shows itself and comes into play. Proposed ETH 2.0 upgrades for the Ethereum network primarily target the scalability issue. All of these improvements, which will be rolled out under a carefully designed plan, will make a difference compared to the current version of Ethereum.

What is Ethereum 2.0? Why is it Important?

Ethereum 2.0 (aka Eth2 or "Serenity") is a long-awaited Ethereum network upgrade that will, among other things, improve the scalability of the network. By adding some improvements to the app, speed, efficiency and scalability will be improved without compromising security and decentralization. Ethereum' Although the transition to this version of the software has been considered for a long time, it took several years to implement this upgrade. One of the main reasons for this situation is that it is very difficult to scale the blockchain in a secure and decentralized way. Ethereum 2.0 aims to solve this problem by adding some very important features to the user. With these new features, there will be some important differences between the Ethereum we know and the new Ethereum that will appear.

Differences Between Ethereum and Ethereum 2.0

The biggest difference between Ethereum and Ethereum 2.0 is the use of the Proof of Stake (PoS) consensus mechanism, shard chains and beacon chains.

Proof of Stake

Proof of Work (PoW) is Ethereum's (and many other blockchains') way of keeping the network secure and up-to-date by rewarding miners for creating and verifying blocks on the blockchain. Unfortunately, PoW is not scalable or comparable as it will need more computational power as the blockchain grows. Proof of Stake (PoS) offers a solution to this problem by replacing computing power with “taking financial risk”.

Transition to Ethereum 2.0

The transition to Ethereum 2.0 will not happen all at once, but will instead be rolled out in three phases, each covering different features to ensure the success of the new Ethereum.

Stage 0

The first stage, or stage 0, is attributed to the introduction of the beacon chain, as it is of great importance for the operation of partitioned chains. There will be no partitioned chains here for now, but the beacon will start accepting validators (stakers) through a one-way deposit contract.

Phase 0 was launched in 2020.

Stage 1/1.5

The next stage is a mix of two stages: stage 1 and stage 1.5. Stage 1 is the step that introduces shard chains that allow validators to create blocks on the blockchain via PoS. At phase 1.5, Ethereum's mainnet is the step that officially launches partitioned chains and will initiate the transition from PoW to PoS.

Phase 1/1.5 is expected to be available in 2021.

Stage 2

In the final phase, Phase 2, Ethereum 2.0 will support finalized partitioned chains (shards) and become the official Ethereum network. Partitioned chains will also be able to work with smart contracts, allowing developers to seamlessly integrate Dapps and other technologies into Ethereum 2.0.