What is Ethereum 2.0 (serenity) and why it is important?

The cryptocurrency market rotates around Bitcoin for many years. However, it was Ethereum who brought blockchain technology to a new level, creating hundreds of new blockchain networks and their own tokens. And, as expected, Ethereum 2.0 significantly improves his predecessor.

Ethereum presented the concept of smart contracts and decentralized applications (DAPPS) to a wider community. Today, many blockchain projects are based on them, including those who prosper under decentralized financing (Defi). Now the platform, the co -founder of which is Vitalik Buterin, is experiencing a significant transformation, and all this in order to stay at the top. That is why Ethereum begins to gradually switch to Ethereum 2.0, and already a new platform will radically differ from the predecessor.

Ethereum 2.0 is an important update of the blockchain platform. In the process of updating, the current consensus mechanism Proof of Work (Pow) will be replaced by the Proof of Stake (POS) algorithm. In addition, it also includes other structural changes. However, the transition of Ethereum from POW to POS is what most Ethereum users are waiting for the most.

What is the difference between Ethereum 2.0 from Ethereum?

Ethereum 2.0., also known as Serenity, presented to users in the form of an improved version of Ethereum. Thanks to the POS algorithm, it will be more scalable and flexible. However, Ethereum does not want to refuse decentralization or neglect it to achieve greater sconality. The new platform will try to find the perfect balance.

To achieve this goal Ethereum 2.0 will implement a unique architecture called “Charding”, which looks like a network of parallel channels working together. Each charmal will have its own set of accounts with a balance and smart contracts. Achieving maximum decentralization will be implemented at the final renewal phase.

Why in Ethereum 2.0 Used Proof of Stake?

In the early years, Ethereum showed an excellent result in processing transactions of millions of users and regulating smart contracts. However, the demand for Ethereum services has grown significantly, which led to the inevitable overload. To understand how important Ethereum is, think that 96% of all Defi projects work on its network. Considering that the platform of 850,000 users of Defi and more than a million Ethereum wallets, it becomes clear that the network needs to be updated.

High demand also led to a sharp growth of the commission on Ethereum – about 600% from August to September 2020. In the end, the need for scalability forced Ethereum to switch to POS. Because of these problems, Ethereum 2 appeared.0.

Miner Choosing Pos Inst, pow in cryptocurrency mining

The difference between POS and Pow

The concept of consensus mechanisms Proof of Stake and Proof of Work is that the network participants called nodes check transactions on their blockchains and support the normal state of the platform.

In the POW, which was first represented by bitcoin in 2008 (in fact, the POW concept was developed long before Bitcoin), the so -called miners that check new transactions from Mempool by solving complex mathematical problems can become nods. Participants must give computing power to win the competition and get the right to check the next block. In exchange for their efforts, miners receive a reward in the form of generated bitcoins or cryptocurrencies using Pow consensus.

POS appeared later as an alternative to POW, and tried to solve the main problems of Bitcoin – weak scalability and large energy consumption.

Unlike POW, POS networks do not use miners, since most of these projects are already launched with produced tokens. Confirmation of new blocks in POS is called “Forzhing”. There are also validators, or the nodes participating in the creation of the block. To become a validator, the nodes must recover part of their tokens on the network. The more tokens they are, the higher the chance to become the next validator. The same method will be used in the upcoming Ethereum 2.0.

The reasons why Ethereum 2.0 uses POS

As already mentioned, Ethereum has grown quickly in the past few years, and it needs to be updated to satisfy demand and avoid overload. POS consensus mechanism at the moment seems an ideal solution, but the results greatly depend on its implementation.

Ethereum is a global platform and it plans to grow even more, which leads to an urgent need for greater scale. Ethereum 2.0 promises to process up to 100,000 transactions per second. For comparison, today it is possible to process on average only up to 15 transactions per second. In general, these significant changes can be achieved only by implementing a joint consumption model.

Advantages of using consensus POS

In addition to obvious scalability, POS solves the problem of great energy consumption. All because the validators no longer need to use computer capacity to solve problems.

According to Digiconomist, to date, the total annual electricity consumption to perform Ethereum transactions reaches almost 12.6 tweads, which is comparable to the total electricity consumption in Georgia. Even though this is six times less than the consumption of energy by bitcoin, Ethereum still requires a lot of energy, which in essence does nothing but transactions that could be processed differently.

How will the transition to Ethereum 2 take place.0

Serenity update means a complete change in the entire Ethereum infrastructure. Obviously, the only way to do this is to adhere to a certain plan.

Ethereum 2.0 will be launched in three stages, which also include the intermediate phase. Earlier this year, the platform launched a series of test networks, including Topaz, Medalla, Spadina and Zinken. The purpose of the experiment is to visualize the future platform, the solution of the problems with which it may encounter. Of course, several difficulties appeared during the test. For example, in six Medalla servers, problems with time and date were noticed, the network showed the date of the next day because of the time that was relevant by 4 hours.

Launch Ethereum 2.0 scheduled for the end of 2020. Confirmed launch date Ethereum 2.0 – December 1, 2020.

Here are the main stages of launch:

The stage will begin in December 2020. The initial stage is aimed at the introduction of Beacon Chain, which will introduce the POS mechanism, and will also store data and control the validator register. It is worth noting that the current POW network will work simultaneously with Beacon Chain to ensure the smoothness of the transition.

Stage 1 is scheduled for 2021, at this time the integration of the chains of the hearts will be introduced. Initially, the network will be launched with 64 hearts that will not support smart contracts and accounts. Next, stage 1 will begin.5, when the main Ethereum network becomes a hearth and switch to POS.

It is expected that the third stage will begin by the end of 2021 or by the first half of 2022. At this stage, the hearts will support smart contracts and become completely efficient. They will maintain accounts, transfers, withdrawal of funds, transfers between hearts and requests under contracts. The current Ethereum Virtual Machine (EVM) will be replaced by Ethereum Webassembly (Wasm).

Is Ethereum 2.0 is better from scalability

If the update is successful, then Ethereum 2.0 will work much better. This is exactly what Ethereum Foundation promises, and this seems to have no doubt. The modeling model will do everything. In the best case, Ethereum will be able to process about 30 transactions per second, a jump of up to 100,000 is really incredible.

The consequences of the transition to Ethereum 2.0

Crypto Community long before the launch of Serenity spoke about the consequences of the transition. When crossing Ethereum 2.0 The price of ETH, as well as other aspects will change. This is how the update will affect the network:

Influence Ethereum 2.0 for the price of ETH

The price of ETH has positively reacted to the upcoming update. Nevertheless, its last increase is associated with a common bull, given by bitcoin and Defi, which is very dependent on Ethereum as a hostess for most Defi projects.

In general, the ETH/USD pair grew from about $ 130 at the beginning of the year to more than $ 600 in mid -November. In early September, ETH/BTC reached a peak of 0.39 at the start of Medalla and with the advent of other news about ETH 2.0. However, the couple sank in price, as Bitcoin became stronger. Naturally, Ethereum with this update will be believed to be a bright future. Of course, how the crypto market reacts, also greatly depends on the actual application.

Security on the Ethereum network

New Ethereum 2 network.0 was developed taking into account safety, although we cannot know how safe it will be for users. Some experts say that the POS systems are even more centralized than the POW.

However, Ethereum will be based on the hearts and requires at least 16,384 validators to launch the network. Third persons hired Ethereum Foundation still check security.

One of the interesting elements is Ethereum 2 steering.0. However, do not think that you can immediately use it. There is a threshold that requires you to hold at least 32 ETH to become a validator.

It turns out more than 19,000 dollars per node, which is a lot for an average person. Nevertheless, you can still steak, using the services of a reliable steaking pool. At the moment, he demonstrates an ascending trend in terms of the total number of deposits in Ethereum Stayking.

What risks does Ethereum 2 carry.0?

During the tests, several mistakes had to be corrected, but the developers of Serenity are generally satisfied with the results. Some users are concerned about potential failures during Ethereum 2 update.0 Due to possible security disorders due to code vulnerability or network separation. However, the developers are sure that such problems are impossible. In any case, due to the fact that the code is new, fraudsters will look for the vulnerabilities of the network in the upcoming update.

Another significant risk is associated with the staying process. It is not known whether the risk of the contribution of these 32 ETH is justified. This issue is especially important for users who prefer to minute using third -party services.

Ethereum 2.0 launch date

Deposit contract Ethereum 2.0 “Beacon Chain Genesis” was created on November 4. Genesis Block should be confirmed on December 1, 2020. At the time of writing this article 16,384, the validators transferred 524 288 ETH into a deposit contract.

What will happen after Ethereum 2.0?

Ethereum development will not stop at stage 2. Co-founder Vitalik Buterin said that there will be more updates aimed at satisfying user demand. He shared his development plan on Twitter, presenting his vision for the next 5-10 years.

In conclusion, it should be noted that Ethereum is constantly being improved to adapt to the constantly changing needs of the crypto community.