As we talked about in the last article, Ethereum, the second largest crypto, is preparing for a major change. The last step in making the largest general purpose blockchain capable of delivering on the original vision.
Ethereum was created to be a “global computer” capable of running immeasurable programs. However, it was a victim of its own success and saw its network “clogged up” in periods of high demand or enthusiasm around cryptography or a particular DApp. The need to have a chain with faster validations and that less burden the validators has been noticed in several periods.
This need became clear during the period in which Bitcoin and other cryptographers recorded historical highs between the end of 2017 and the beginning of 2018. At that time, a decentralized application called Cryptokitties became super popular due to the values that its “kittens” ”Came to be traded: 200 thousand dollars! Its popularity was felt in the number of transactions that DApp injected into the Ethereum network and it was unable to process them. It was clear proof that the scalability problem had to be resolved - the network's capacity to grow and absorb a large number of transactions.
It is with this objective in mind that the Ethereum core team has been working from the beginning. Create for a network capable of processing many more transactions. In addition to scalability, the other main objective is to reduce the energy consumption of the network. The Proof of Work (PoW) algorithm expends a lot of energy in the validation of the blocks. The Ethereum developers believe this is just a waste of energy.
The path to the implementation of this new form of consensus has been made since the launch of the network. As the Proof of Stake (PoS) is very experimental, the team decided to launch Ethereum based on PoW, while developing the next phase of the project. This path was divided into 4 phases and will culminate with “Serenity”.
The first 3 phases were called Frontier, Homestead and Metropolis and each of them took an important step to increase the capacity of the network. The Serenity phase is the final step and it will also be divided into 4 phases. In this way the transition will be as smooth as possible. Despite this intention, the launch of this phase itself has been troubled and has already been delayed several times. This new step will be the most complex as it requires two new features that have never been tested:
- the launch of a new validation algorithm using PoS called “Casper“;
- a new method for expanding transaction processing capabilities known as sharding.
The 4 phases of Ethereum 2.0
The launch of Ethereum 2.0 will be divided into 4 phases.
Phase 0 - Launch of the Beacon Chain
The first phase of the process focuses on the launch and implementation of the new consensus algorithm. Casper is designed to be a more efficient validation process in terms of energy consumption, replacing PoW. Users who want to become validators must deposit 32 ETH in a smart contract in the original Ethereum chain. This contract will create an identical amount of ETH on the new platform that will be used as collateral by the future validator. The ETH used here cannot be sent back to the original chain and when the systems are merged they will be destroyed in the original chain.
Phase 0 will focus on coordinating validators and monitoring their work. At this stage, they will be working to keep the core of the system safe, known as the Beacon chain (Farol - because it works as a reference point for the network). This chain will be the main blockchain where a record will be created of all validators, the amount of its collateral and indicate the main roles. They are: checking blocks or proposing new ones.
At this stage it will not be possible to withdraw any rewards that validators receive for the original Ethereum chain. This is intended to reduce complexity and prevent duplication of coins in case something goes wrong. Transactions on the new chain will not be validated at this stage. Smart contracts and DApps will continue to work normally on the Ethereum 1.0 system.
Phase 1 / 1.5 - Fragmentation begins
When the Beacon chain and the PoS algorithm are running smoothly, the system moves to phase 1 and implements the main solution for the scalability of Ethereum 2.0: Sharding (fragmentation). In traditional computing, sharding refers to the partition of a database by multiple machines. In the domain of blockchains, it means dividing the network of a single cryptograph into several chains.
Using this solution it is possible to divide transactions by several chains instead of overloading a single blockchain. In this way, each chain processes transactions and creates blocks in parallel with the other chains, dividing efforts to multiply the speed and the processing capacity of the network. In Ethereum 2.0, each blockchain that works for the network is considered a shard.
The Beacon chain acts as the nucleus that stores records of the data stored in each shard on a central blockchain. 64 partitions will be created that at the beginning will only be testing the joining and movement of data between shards and the Beacon chain.
It is in phase 1.5 that the two platforms are merged. For this, the original blockchain of Ethereum will be transformed into one of the shards of the new network, changing the consensus algorithm for PoS. If all goes well, users and DApps will not notice the change.
Phase 2 - Implement the DApps
Phase 2 makes the new platform capable of running DApps. At this point, users will be able to store data and use smart contracts in Ethereum 2.0. The biggest news here will be the extension to new programming languages beyond the only one that is accepted in the Ethereum network today: Solidity.
Phase 3 - Finishing touches
The last phase is not well defined. This phase will be used by the programmers to add everything necessary for the good growth and development of the network. This may include adding shards for greater scalability or adding technology to improve user privacy (ZK-STARKS).
Buterin predicts that it could take 5 to 10 years before implementation is complete. Other forecasts indicate that each phase may take 6 to 8 months. There is currently a network where a test Beacon chain has been launched to simulate phase 0 of Ethereum 2.0 in a controlled environment. This test network has more than 31,000 validators that have already accumulated almost 1 million ETH. You can check how the tests are progressing at beaconscan.com/