Educational Post:
ETH 2.0: Everything you Need to Know
On Tuesday, the final testnet before the launch of the Eth 2.0 network went live. Here’s what you need to know about the network upgrade.
When does the Ethereum 2.0 network launch? Eth 2.0 will launch by the end of 2020.
What’s different about Eth 1.0 and Eth 2.0? Eth 1.0 runs on a consensus mechanism known as Proof of Work (PoW). Eth 2.0 will move to Proof of Stake (PoS), which relies on validators instead of physical miners. With PoS, block transactions are validated based on the number of coins (e.g., Ethereum) miners hold. In exchange for staking Ethereum, users will receive a reward.
How do I stake Ethereum? Staking is the process of lending crypto to the network for liquidity purposes and receiving a reward. To stake on Eth 2.0, users need to deposit 32 ETH to the contract. Validators will randomly be selected and given the opportunity to create the next block. When they successfully validate a block, they will receive an ETH reward. If a user tries to compromise the network, they will lose all 32 ETH staked. At the time of writing, 32 ETH = $12,512
Will Eth 2.0 be more scalable? Ethereum’s scalability issue was one of the most pressing reasons for the Eth 2.0 upgrade. Currently, the Ethereum network can only support around 30 transactions per second, which often causes network congestion and delays. According to Vitalik Buterin, the founder of Ethereum, Eth 2.0 will achieve 100,000 transactions per second. The vast increase in processing power is thanks to the implementation of shard chains.
What are shard chains? The current Ethereum blockchain structure is made up of a single chain with consecutive blocks, which is very secure but slow and inefficient. With shard chains, the Ethereum blockchain is split, allowing transactions to be processed in parallel chains instead of consecutively. With more “lanes” running side by side, the network can move quicker and scale easier.
What will happen to my ETH on Ethereum 1.0? No action is required by Ethereum holders when the 2.0 update occurs. Ethereum 1.0 will still be usable, and at some point, the chains will merge.
