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Detailed explanation of Ethereum 2.0

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In a sense, the Ethereum that is being used is already "can be regarded as" one of the shards of Ethereum 2.0.

Original title: "Ethereum 2.0 – A Game-Changer? Proof Of Stake, The Beacon Chain, Sharding, Docking Explained"

Original source: Finematics

Original compilation: 0x26

So what happened to the long-awaited Ethereum 2.0? What are PoS (Proof of Stake), Beacon Chain, Sharding and Docking? And what are the different stages of their rollout? You will find answers to these questions in this article.

Overview

First let Let's outline what Ethereum 2.0 is and why it is needed.

Ethereum 2.0 or Eth2 is a set of continuous Ethereum upgrade plans aimed at making Ethereum more scalable , safer and more sustainable. These upgrade changes were made by a number of different teams in the Ethereum ecosystem, each focused on building a specific part of the overall upgrade.

Scalability

The current Ethereum network supports 15 transactions per second. This certainly becomes a limiting factor when it comes to onboarding millions of new users and launching more decentralized applications. In order to make Ethereum more scalable, the goal of Ethereum 2.0 is to support 1000 transactions per second. An important reminder - the increase in transactions per second should not come at the expense of increasing the size of the nodes in the network.

Security

The security of the decentralized web has always been one of the highest priorities. Ethereum 2.0 aims to improve the security of the network and prevent all forms of attack, including "51% attacks", that is, someone can force fraudulent changes by controlling a majority of the network's computing power.

Sustainability

It is well known that the current Ethereum network is based on the Proof of Work (PoW) consensus, which requires a lot of computing power and energy. Ethereum 2.0 aims to make Ethereum more environmentally friendly by replacing energy-intensive proof-of-work with proof-of-stake (PoS).

Originally, the set of changes required to achieve these goals was called Tranquility , but now most people call it "Ethereum 2.0" or just Eth2.

Interestingly, almost all of these goals are on the Ethereum roadmap, even before the network officially launches discussed.

Let’s start with one of the biggest changes – the shift of the consensus model from “Proof of Work” to “Proof of Stake” (PoW to PoS).

Proof of Stake (PoS)

The current Ethereum consensus model - Proof of Work - is a well-known and time-tested approach to building cryptocurrencies.

Proof of Stake attempts to solve the problem of electricity consumption by getting rid of miners entirely. Instead of investing resources to secure the network, an economically incentivized proof-of-stake consensus model is used.

Proof of Stake attempts to solve the problem of electricity consumption by getting rid of miners entirely. Instead of investing resources to secure the network, it relies on proof-of-stake using economic incentives.

In Proof of Stake, users who want to protect the security of the network, by staking their Ethereum becomes a verification node. Similar to miners in proof-of-work, each validating node is incentivized to validate transactions for the network of blocks by earning block rewards and transaction fees.

To discourage validators from attempting to game the system and verify fraudulent transactions, Proof-of-Stake systems implement a process called "slashing" mechanism whereby validators lose a portion of their staked Ethereum if they decide to act dishonestly.

In order to successfully complete the "51% attack" of PoS, the attacker must control 51% of the Validator nodes, which would require Ethereum to have 51% of validator nodes - certainly a huge amount of capital.

In order to become one of the Ethereum 2.0 validator nodes, 32 Ethereum tokens are required. Another way is to use a staking pool, such as Rocketpool, to participate in staking with less than 32 nodes (Rhythm Note, and now all platforms have launched Ethereum 2.0 staking activities, users can Choose yourself).

The reward of validating nodes depends on the amount of Ethereum in the system. If the Ethereum in the system is less than 1 million, then the rate of return can be as high as 18% per year, and if the Ethereum in the system exceeds 100M, then this figure can be as low as 1.81%, or even lower.

Proof of Stake solves 3 main problems of Ethereum 2.0. It makes Ethereum more sustainable by eliminating energy-intensive miners. It makes it more secure by making "51% attacks" more difficult. And it makes it more scalable by unlocking shards, which is difficult to achieve in a proof-of-work model because it will likely result in reduced computing power across multiple shards.

This is actually a good way to smoothly enter fragmentation.

Shards

Minutes The concept of slices is not specific to the Ethereum 2.0 upgrade. This is actually a common procedure in computer science that allows a database to be split into parts, each part containing a portion of the entire dataset. Each part is called a "shard".

When it comes to Ethereum 2.0, each "shard" is basically A separate new chain. Initially, there will be 64 shards. This directly addresses Ethereum's scalability issues, as sharding will allow scaling the network's workload.

Most importantly, each Ethereum node only needs to run one shard. This means only a small portion of data is stored, making it easier to run nodes without powerful hardware. Making nodes easier to run should attract more network participants, which equals more decentralization and more security.

Initially, shards will only provide additional data, and shard chains cannot process transactions or smart contracts.

At this point, you may have such a question: How can sharding improve scalability without processing transactions or smart contracts?

Improved scalability is possible because of Layer 2 scaling - especially Rollups. Rollups allow packaging transactions (and smart contract execution), generating cryptographic proofs and submitting them on-chain. This process only requires an available data shard to store proofs, which means it can be used with the initial version of the shard.

You can find it at here to learn more about Layer 2 and Rollups.

This is not over yet. Although a mix of data sharding and Rollups enables Ethereum to handle over 100,000 transactions per second, there is one other area where it can be improved. It is possible to upgrade shards and make them fully executable, just like the current Ethereum chain. Whether this improvement is needed remains to be seen, depending on the popularity of data sharding and Rollups solutions.

It is also worth mentioning that in the data sharding model, The current Ethereum chain becomes one of the shards. This is the only shard capable of processing transactions and smart contracts.

The Beacon Chain

The beacon chain is the next important concept to master in order to fully understand Ethereum 2.0.

The beacon chain is responsible for coordinating this proof-of-stake based system, randomly assigning validators to validate different shards. Randomness is important because it prevents node collusion and controls sharding. (Rhythm Note, which is the working logic of Ethereum 2.0)

The beacon chain basically creates a new proof-of-stake network and runs in parallel to the current Ethereum network. Launching it is the first thing on the Ethereum 2.0 roadmap.

Initially, validators will add new blocks to the beacon chain, but they will not validate the current Ethereum 1.0 master web transactions. This will reverse once the current Ethereum 1.0 chain becomes a shard of Ethereum 2.0.

Docking

This is the last piece of the whole Ethereum 2.0 puzzle - docking.

Docking is to convert the current Ethereum chain (PoW) into the Ethereum 2.0 Proof-of-Stake system (PoS) The process of one of the slices.

This process will also mark the end of Ethereum’s proof-of-work (PoW) as we know it today, and a move towards Full transition to the new Proof of Stake (PoS) model.

Docking means running smart contracts on the PoS network. Most importantly, it will provide a complete history and current state of Ethereum, allowing for a smooth transition for all Ethereum holders and users. (Rhythm note, should be the complete history of Ethereum after the fork of the Ethereum DAO event.)

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Phase Schedule

Let's look at all the concepts we just discussed, Ethereum How 2.0 is scheduled. The entire development process is divided into several stages.

Phase 0 is the first phase of Ethereum 2.0, focusing on the release of the beacon chain . For this to happen, a threshold of 16,384 validators must be reached. The required number of verifications was reached on November 24th, successfully launched on December 1st at 20:00.

The next stage, which is stage 1, focuses on sharding or specific data sharding as we described earlier .

Once Phase 1 is successfully completed, the next phase is Phase 1.5, which focuses on docking - making the current The Ethereum chain becomes one of the shards in Ethereum 2.0. It looks like Phase 1 and Phase 1.5 will both be completed in 2021.

After reaching stage 1.5, there are two possible scenarios. Either the combination of data sharding and Rollups will be sufficient for the needs and no further stages are necessary. Or maybe a full sharding solution is still needed, which brings us to the final stage, Phase 2. This will continue to be observed after successful completion of Phase 1.5.

Summary

Also worth it It is worth mentioning that although the initial phase 0 has not changed much for the current Ethereum chain. It may still have some potentially significant economic implications. This is because ether sent to Ethereum 2.0 is locked and cannot be revoked until phase 1.5 is complete, which means that a portion of ether is locked in the current system.

When it comes to DeFi, probably most of the activity will focus on executable sharding or Layer 2 Rollup solutions on - at least initially. This is because DeFi takes full advantage of the composability and more complex interactions of smart contracts, so a DeFi protocol that cannot easily interact is not very meaningful.