Get Ready! Ethereum 2.0 is Coming!
Ethereum coin

Get Ready! Ethereum 2.0 is Coming!

By PhoenixDev | CryptoWorld - CW | 16 Jun 2020


Although it has already been delayed for some time, the release of Ethereum 2.0 may be near. Although initially projected for January 2020, error and vulnerability detection and correction is taking a long time. But on June 10, the company Prismatic Labs announced the launch of the latest test network, Onyx, prior to the release of Ethereum 2.0.

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What is Ethereum 2.0?

Ethereun 2.0 is the evolution of the Ethereum Blockchain network and it mainly seeks:

  • Improve its scalability. The Ethereum network has seen an increase in its use, which has led to an increase in the time and cost of executing transactions.
  • Improve speed and usability. The greater the use of the network, the greater bottleneck occurs in the Ethereum virtual machine that executes the code deployed by the network and maintains its state.
  • Improve energy consumption. The greater the use of the Ethereum network, the greater the energy consumption required to carry out the transactions. The solution is to change the consensus protocol of the network, from proof of work (PoW) to proof of stack (PoS).

What is proof of work (PoW)?

Proof of work is the consensus mechanism (i.e. the transaction security and validation mechanism) currently implemented by Bitcoin networks and the current Ethereum.

In PoW, rewards are valued at each new block in the chain by solving computer problems that require a lot of computational effort. This makes the energy consumption in this type of network enormous.

What is proof of stack (PoS)?

The proof of stack is a mechanism by which those users who have funds in the network, can bet with them in the validation of blocks and earn rewards for it.

It is assumed that those who bet their currencies (especially those who do so in greater amounts) will be most interested in everything working well and, therefore, in protecting the system. In principle, although anyone could bet their tokens in this system, a protocol will be used to choose the validators: the right to validate blocks will be proportional to the amount wagered.

How does this system change mining?

In networks that use proof of work as a consensus mechanism, those with larger, more powerful and sophisticated hardware equipment have been monopolizing cryptocurrency mining, so in the end, mining is monopolized by large groups of miners that have these equipments.

However, the use of the proof of participation as a consensus system means that anyone without a large team can participate in the validation. This would make Ethereum 2.0 a more decentralized and faster network.

How will it work?

Being a gamble and validator in Ethereum 2.0 will be a fairly simple process: it will only take a minimum capital of 32 ETH (about $ 7,400 today) and run a validation node (in this case, with a simple laptop it will be enough. But, yes, it is sought that it is always connected to the network).

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Stacking costs, benefits and risks

Like everything, stacking in Ethereum 2.0 has its benefits and its risks:

  • The costs are based on having the necessary equipment to work as a validator (although much less than what would be required in the case of a network like Bitcoin) and having a minimum of 32 ETH to start working as a validator.
  • The main benefit is, of course, having benefits from having Ethereum coins.
  • There are several risks, including the fact that when Ethereum coins are wagered, they are blocked for a certain period of time. Therefore, if there is a drop in the Ethereum price, we will not be able to sell them, and the benefit of the stacking may not offset the losses due to the drop in its valuation. Also keep in mind that if a validator is hacked, it is possible to lose funds that would not be recovered.

Thanks for reading this post and, see you soon!

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PhoenixDev
PhoenixDev

A Mobile Developer interested on Blockchain and Cryptocurrencies.


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