You’ve been waiting for it. Waiting for a really, really long time. It’s possibly worse than waiting for Christmas in June. However, the time is finally nigh – Ethereum 2.0 is on the horizon. This system upgrade is meant to bring scalability (something Ethereum has been struggling with for quite a while now) and increased security through a number of changes, the most major one being switching to Proof of Stake instead of Proof of Work. In this overview, the Swapzone team will describe the changes awaiting Ethereum, why we need 2.0 and what will happen next.
What is Ethereum 2.0?
First and foremost, Ethereum 2.0, also known as Serenity, is a major upgrade of Ethereum blockchain. Serenity is taking place to address the issues of speed, efficiency and scalability (well hello there, buzzword) of the existing chain, so more transactions can go through Ethereum without having to face delays and costly fees. The upgrade will be launching in several stages and the whole process has to begin at the end of this year.
What will the changes be?
Ethereum is switching to Proof of Stake. This transition was something the community was talking about for quite a while now. Currently, Ethereum runs on the same algorithm as the majority of known networks – Proof of Work. This means that miners are using the posers of their computers to calculate and solve mathematical puzzles and verify the transactions going through the network. The miners get rewarded in cryptocurrency – in this case, in ETH coins. This process works, but it requires lots of computing power to sustain.
Proof of Stake, on the other hand, differs in a way that there are no miners needed – the validators stake cryptocurrency to process new transactions. The validators are selected from the people holding cryptocurrency depending on how much they stake and for how long. Proof of Stake is way more energy-saving than traditional mining. The security of a taken blockchain, too, is not depending on the power of computers.
Why is scaling important for Ethereum?
Currently, Ethereum blockchain can support around 30 transactions per second. With the abundance of programs working with Ethereum and overall popularity of the network, this limit creates congestion. Ethereum 2.0 is meant to solve this problem and offer the capacity of 100.000 transactions/second, which, of course, sounds way more developed. This giant leap is supposed to happen with the implementation of shard chains.
How will Ethereum 2.0 start?
There are three main phases to the rollout of the update – starting from the end of 2020.
Phase 0, the very first one in this process, will bring us the establishment of the Beacon Chain. Beacon Chain exists to store and manage the registry of validators and deploy Proof of Stake. The “old” Ethereum will still be running alongside to make sure there is no break in the data flow.
This phase is set to launch on December 1st, according to ETH Foundation. The launch, however, can only happen if there are 16.384 validators in the network (by Nov. 24th), each of them staking 32 ETH – quite an investment for the majority of users.
ETH2 deposit contract was also already released, giving a start to all the Ethereum 2.0 engines.
What is a deposit contract and why does it matter?
The deposit contract is the main step towards the release of Phase 0. To make the transition to ETH2 possible, the users will need to start staking – for this, the funds need to be migrated from the old network into the new one. This is exactly where the deposit contract is needed. Once the conditions are met, Ethereum 2.0 is ready to go. By the way, you can check the progress of how the funds are accumulating through this Twitter account.
What will the future for Ethereum be?
Ethereum 2.0 is a very big step for the Foundation, ETH users, services and more. Ethereum developers state that there will be even more research, even more evaluation, even more progress done in the next several years.
Many, of course, speculate on how ETH2 will influence the price of Ethereum. Scalability, which is promised by Ethereum 2.0 definitely means more usage. Fees will decrease, transactions will be faster, and the network will provide a seamless experience for the ones using it.
With the experts being optimistic about the future of Ethereum, one might be in the search of services supporting ETH for exchanges and being a part of the Ethereum ecosystem. From this point, we are happy to introduce an array of non-custodial exchanges supported on Swapzone – all of them having ETH on board. You can check all of them on the main page of our website, choose the best rates for Ethereum swaps, exchange easily and instantly, of course, wait for the launch of ETH2.