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All about Ethereum 2.0


All About Ethereum 2.0 

eth 2.0. ethereum 2.0

Ethereum 2.0, also known as Serenity or ETH 2.0, is an upgrade to Ethereum at various levels. Its main goal is to increase Ethereum's transaction capacity, reduce fees and make the network more sustainable. To do this, Ethereum will switch from proof-of-work (PoW) to proof-of-stake (PoS) as its consensus method (PoS).

1) Proof of work (PoW) and proof of stake (PoS).

  • Proof of work is the original method utilized by blockchains. PoW requires computers to compete with each other to process transactions and earn rewards. This process is very energy-intensive and also time-consuming.
  • With PoS, the consensus is achieved by using an algorithm that chooses a node to win a block of transactions, rather than nodes competing to win the block using large amounts of energy. When a node is selected, it creates the next block of transactions in the chain. With PoS, these nodes are often referred to as "participation pools".

Therefore, some new cryptocurrencies have chosen to go another route – proof of stake. Upgrading Ethereum to version 2.0 will move it to PoS to provide much faster transactions and lower fees.

2) Where Can I Stake My Ethereum?

Ethereum 2.0 is obviously not out yet, but some services allow Ethereum holders to stake their assets on the test-net right now. First, it is important to understand that staking your ETH will lock them in place until the full release of Ethereum 2.0. While your Ether is locked it will of course earn staking rewards, but stickers cannot withdraw their ETH from the stake pool.

Staking on the Ethereum test-net via a betting pool is somewhat difficult and involves a lot of risks. Therefore, it is best left to the more technically advanced. For those who want to take a simpler and more convenient approach, it's probably best to bet on an exchange. Some of the exchanges that currently allow Ethereum holders to stake include Kraken, Coinbase, Binance, and more. Betting on an exchange involves higher fees, and most exchanges get a betting reward of 15% or more.

2) How does Ethereum 2.0 scaling work?

  • Sharding is a technology that Ethereum 2.0 intends to use to expand its capacity. This is a common technique among a number of new PoS cryptocurrencies, as it allows them to scale without sacrificing security and decentralization.
  • Partitioning is a way to break up a database into smaller, more manageable chunks. With a PoW blockchain, most nodes or computers on the network have an exact copy of their transaction history. All of this history might take up a lot of storage space, especially for older cryptocurrencies with a lot of transactions.
  • With sharding, the blockchain is split into parallel partitions, and nodes are assigned to one partition instead of having to keep all the chain data. This allows more transactions to be processed simultaneously, greatly increasing transaction throughput and speed.

4) When Will Ethereum 2.0 Be Released?

The upgrade to Ethereum took place in stages. The first stage, "stage 0", is already online. Phase 0 introduces the beacon chain. The token chain is essentially a new PoS blockchain that the existing Ethereum chain will eventually merge into. The token chain introduces PoS and configures Ethereum for staking and shard chains and is a sort of test-net for the future PoS version of Ethereum.

The second stage, or "Phase 1", is called fusion. The merger represents the official move to the PoS consensus model, where the existing Ethereum network will merge with the token chain. Ethereum developers also call the merger "embedding" and expect it to happen by the end of 2021 or 2022. After the merger, Ethereum will become a PoS blockchain that will allow Ethereum holders to stake their ether and earn rewards.

It is important to note that Ethereum holders have nothing to do as Ethereum goes through this merger phase. This process will be automatic.

The third phase, "Phase 2", actually implements sharding so that Ethereum can scale and enable higher transaction capacity. Part Chains is expected to be enabled in 2022 after the merger.

5) Ethereum 2.0 features

  • Ethereum 2.0 represents Ethereum's transition to a new "proof-of-stake" consensus model.
  • Proof-of-Stake provides faster transactions and lowers fees compared to the previous proof-of-work model.
  • The proof-of-stake model allows Ethereum holders to “stake” their assets on “stake pools” that will earn rewards and grow their holdings over time.
  • Ethereum holders can currently stake their shares on a number of popular exchanges such as Kraken, Coinbase, and Binance.
  • Ethereum 2.0 will implement a method known as sharding, which will significantly increase transaction speeds and potentially increase its capacity to 100,000 transactions per second or more.
  • The current cost of transactions on the Ethereum network is very high, preventing many people from using it. If this update is successful, the lower fees it will impose will make the network more affordable for average users.
  • Upgrading Ethereum could have a profound impact on its price, as its lower fees and faster transactions open up the network to more users.