At the core of Ethereum is the idea that a blockchain can do more than just underpin decentralized money \u2014 for example, to run an entire decentralized economy.<\/p>\n
Five years after its launch, Ethereum has:<\/p>\n
Ethereum is a key element of the decentralized finance (DeFi) sector and is used in the majority of stablecoins.<\/p>\n
Despite evident progress, Ethereum has its problems. The main one is low network throughput. It currently handles around 14 TPS, which is not enough for global scaling of the decentralized financial infrastructure.<\/p>\n
ETH2 \u2014 a major network upgrade designed to raise its scalability, security and energy efficiency without compromising decentralization. The developers envision Phase Zero of ETH2 as a testing ground for the Proof-of-Stake consensus algorithm.<\/p>\n
This article outlines what users can expect from the launch of the upgrade scheduled for December 1.<\/p>\n
The majority of economic activity and smart contracts will continue to run on the original Ethereum network, which will operate in parallel with ETH2. Developers will implement a pathway to move ETH1 to ETH2, though a reverse move will be impossible.<\/p>\n
ETH2 will fundamentally alter Ethereum’s monetary policy \u2014 annual inflation may fall to under 1%. The transformation is also expected to apply to the network’s native asset, which is anticipated to become, among other things, a store of value.<\/p>\n
Vitalik Buterin, Ethereum co\u2011founder, is convinced that meaningful improvements in network parameters can be seen much sooner than most expect.<\/p>\n
\n\u00abThe Merge [ETH1 and ETH2], Proof-of-Stake, enticing 100 000 TPS \u2014 all of this will happen faster. I expect the ETH2 updates to be faster and more orderly than those in ETH1\u00bb, \u2014 said<\/a> him during a recent AMA session on Reddit, outlining his view of the network\u2019s prospects over the next two years after the transition to ETH2.<\/p>\n<\/blockquote>\n
He also noted that a technology [simple_tooltip content=\u2019The ZK-Rollups technology aggregates multiple transactions into one, reducing the load on the main Ethereum network.\u2019]ZK-Rollups[\/simple_tooltip], which can provide up to 4000 TPS, and transactions using it can cost up to 100 times less than on the main network.<\/p>\n
In September, this layer-2 solution was integrated<\/a> by the stablecoin issuer Tether (USDT), enabling the technical ability to compress transactions of ETH, ERC-20 tokens and smart contracts.<\/p>\n
\n\u00abZK-Rollups is the most comprehensive and preferred scaling solution. It keeps data on the main chain, not relying on a sidechain\u00bb, \u2014 said Paolo Ardoino, CTO of Tether and Bitfinex.<\/p>\n<\/blockquote>\n
How will it happen? Four phases of Ethereum 2.0<\/h2>\n
Phase 0: Beacon Chain<\/strong><\/p>\n
Aimed at testing the viability of the Proof-of-Stake algorithm. At this stage the network will be largely experimental, though real Ether will be used.<\/p>\n
In this phase the following PoS aspects should become functional:<\/p>\n
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- Management of the validator set;<\/li>\n
- Management of validator funds;<\/li>\n
- A randomness generator to help select block producers and staking attesters;<\/li>\n
- Validator voting on proposals for block size;<\/li>\n
- Distribution of rewards and imposition of penalties on validators.<\/li>\n<\/ul>\n
Phase 1: Sharding<\/strong><\/p>\n
If Phase 0 tests the basic PoS infrastructure, Phase 1 tests the basic sharding model.<\/p>\n
During this phase 65 blockchains will operate in parallel \u2014 the existing Beacon Chain will gain 64 new shards, with bidirectional interaction between them.<\/p>\n
Phase 1.5: The merge of the PoW Ethereum chain with the new PoS chain<\/strong><\/p>\n
It will not affect historical data of the current network, as the PoW blockchain will be one of the fragmented chains in the new mechanism. Miners should note that the PoW chain will not itself support PoW.<\/p>\n
Phase 2: Implementing the new operating mode<\/strong><\/p>\n
It is expected that at this stage ETH2 will run smart contracts and economic activity. The shards will no longer serve as data stores for ETH1’s corpus and will begin to resemble virtual machines and ETH1 smart contracts.<\/p>\n
Launch of Phase Zero<\/h2>\n
On November 4, the Ethereum Foundation confirmed<\/a> the launch of the ETH2 deposit contract, and announced the genesis block date \u2014 December 1 at 12:00 UTC (15:00 MSK).<\/p>\n
By November 24, participants needed to deposit a total of 524,288 ETH (with a minimum stake of 32 ETH). Another prerequisite for Phase Zero was the participation of 16,384 validators.<\/p>\n
Despite the somewhat slow pace of deposits, by the deadline all conditions proved to be met<\/a> and the threshold was surpassed.<\/p>\n
\nWe have liftoff. \ud83d\ude80<\/p>\n
Thank you to the devs, the researchers, educators and community members who made this happen.<\/p>\n
See you on December 1st @ noon UTC. pic.twitter.com\/bZ15EDefMK<\/a><\/p>\n
\u2014 Eth 2.0 Deposit Contract \u2014 Progress Meter Bot (@DepositEth) November 24, 2020<\/a><\/p>\n<\/blockquote>\n