Ethereum has become widely popular for its unique capability to build applications atop the platform. It also applied blockchain technology for various applications beyond peer-to-peer payments. The network is currently gearing up for a huge transformation as the long-awaited Ethereum 2.0 upgrade nears launch.
With the ever-growing list of dApps built on the Ethereum network, it had to contend with serious concerns regarding network congestion and gas fees. To improve the efficiency of the network and the ability to support more dApps, developers have planned to launch the Ethereum 2.0 upgrade. Let’s review what Ethereum 2.0 is and when it will fully launched.
Ethereum 2.0 is an upgrade to the existing Ethereum network. It focuses on improving the scalability and security of the network by introducing several changes to the network’s infrastructure. One of the notable changes is switching from a Proof-of-Work consensus mechanism to a Proof-of-Stake consensus mechanism. The primary objectives of this upgrade are to enhance the speed, scalability, and efficiency of the Ethereum network. As a result, the Ethereum network can process more transactions per second and ease up network congestion issues along with reducing gas fees.
However, Ethereum’s official website recently announced that it would stop referring to the upgrade as Ethereum 2.0. New users of Ethereum are assuming that Eth 1.0 comes first while 2.0 comes later, and there is also another misconception that Eth 1.0 ceases to exist after 2.0 goes live. To limit this confusion, the website announced that it would refer to Eth 1.0 as the ‘execution layer’ for handling transactions and execution, and Eth 2.0 as the ‘consensus layer’ for handling Proof-of-Stake consensus. The Eth 2.0 upgrade will be executed in multiple phases, which we discuss below.
The Beacon Chain is the first phase of the Eth 2.0 upgrade. When it went live on December 1, 2020, Beacon Chain introduced Proof-of-Stake to the Ethereum network. Staking and validating transactions is a much less complex process when compared to mining in the Proof-of-Work mechanism. The PoS is also expected to be more secure in the long run because the network becomes more decentralized and secured if more validators join the network. The Beacon Chain acts as a foundational component for the next phases of the upgrade.
The next phase of Eth 2.0 upgrade is referred to as ‘The Merge’. As per Ethereum’s website, this phase is going to be launched in “Q2 2022”. When the Beacon Chain went live, it was separate from the Ethereum mainnet, which continued to run on the initial Proof-of-Work mechanism. With The Merge, the two systems will come together and the mainnet will merge with the Beacon Chain. After The Merge, the mainnet will bring the smart contracts and full history of Ethereum into the Proof-of-Stake mechanism. By employing the eco-friendly PoS consensus mechanism, Ethereum achieves scalability, security, and sustainability.
The final phase of Eth 2.0 is ‘Shard Chains’. This plays a crucial role in improving the scalability of the complete Ethereum network. Instead of performing all the operations on one single blockchain network, Shard Chains spread the operations by introducing 64 new chains, which are also called ‘shards’. Sharding will ease the network congestion and handle more transactions per second, which in turn improves efficiency and scalability. When the Shard Chains launch, it will enable less-complex hardware equipment, which can store the lesser network data, to run an Ethereum node.
As of April 2022, the Eth 2.0 upgrade has not yet fully launched. Since it is a multi-phased upgrade, it will require several years to fully launch. The upgrade has been in the works for years, and the first phase of the Eth 2.0 upgrade went live on December 1, 2020. Developers are cautious and taking their time to ensure that the network is secure and prepared for the launch of the next phases. The network already supports staking and validators need a minimum of 32 ETH to activate the validator software and much less ETH to join a staking pool. However, validators need to wait for the second phase to get completed to be able to withdraw their staked ETH.
According to the latest update from the Ethereum website, the final Eth 2.0 upgrade is expected to be completed by 2023. The Beacon Chain went live in 2020, and The Merge is scheduled to launch in Q2 2022. The Eth 2.0 upgrade will be considered complete when the third phase, Shard Chains, goes live. As per the Ethereum website, Shard Chains will go live by 2023. However, officials have not released or set an exact date for the completed upgrade.
Ethereum 2.0 is a much-awaited upgrade, with everyone from investors and NFT enthusiasts to nodes and the developers of dApps anticipating the changes. When the Eth 2.0 upgrade successfully launches, it will continue its legacy as the leading smart contract platform, despite several other blockchains like Solana, Avalanche, and Terra attempting to overcome Ethereum.