On December 2, 2020, Ethereum co-founder Vitalik Buterin published an updated roadmap for Ethereum 2.0 also known as Serenity. This roadmap includes three main phases: Phase 0, Phase 1, and Phase 2 and is centered around the introduction of the sharding technology and Ethereum WebAssembly which will increase Ethereum scalability and enable its network to process thousands of transactions per second.
What Is Ethereum 2.0?
Ethereum was originally built on the Ethash hashing algorithm with the proof-of-work consensus, which requires a network-wide agreement among all network nodes on the transactions inputted in the block and the block’s hash. This precludes efficient scalability, i.e. a high transaction throughput in a growing network, and has always been the main deficiency of the PoW consensus for the mainstream adoption of PoW cryptocurrencies.
To solve this deficiency, the Ethereum community decided to switch Ethereum to a new proof-of-stake Beacon chain coupled with the sharding technology. Ethereum 2.0 is running on a new blockchain; in it, there will be groups of nodes called shards. Each shard will combine several nodes that will process a certain number of transactions with every new block on the Beacon chain. Therefore, every node will be processing transactions within its shard, not all transactions included in a mainnet block as is the case with Ethereum 1.0. This will allow all shards to process their own portions of transactions in parallel, which will increase the network efficiency and scalability.
Besides, ETH 2.0 will introduce committees of validators, each committee consisting of at least 128 randomly chosen validators. They will be shuffled by the Beacon chain into new committees every 64 blocks. Every such committee will be voting on the validity of blocks provided by the shards. When a shard block gets approved, it will be added to the Beacon chain via a crosslink. Shards will be able to reach a cross-shard consensus for better network security in Phase 2.
Ethereum 2.0 Phases
In Phase 0, the Beacon chain’s deposit contract was opened for ETH staking and aggregation of ETH 2.0 validators. Ether from the Ethereum 1.0 blockchain, being locked in the ETH 2.0 deposit contract becomes automatically exchanged for ETH2, which can be withdrawn. Also, every 32 ETH locked in the contract allowed their owner to become a validator. There were 16,384 validators required for the Beacon chain to produce its genesis block, which happened on December 1, 2020.
Phase 1 will introduce crosslinking and support for decentralized applications. Crosslinks will be necessary for the shards to broadcast their transaction blocks into the Beacon chain and for cross-shard consensus. However, the network state will yet be stored on the Ethereum 1.0 blockchain, and smart contacts will continue to operate on it too.
In Phase 2, the Ethereum network state will be transferred to Ethereum 2.0, and ETH2 will become transferable. Also, in this phase smart contracts will be reintroduced on the Beacon chain, and Ethereum WebAssembly (eWasm) will replace Ethereum Virtual Machine (EVM). The transition from EVM to eWasm will be key to increasing the network’s throughput to over 10,000 transactions per second and facilitating its scalability.
Ethereum 2.0 shall become more lightweight, more efficient, and achieve better scalability through the use of sharding technology and Ethereum WebAssembly. Ether locked in the Beacon chain deposit contract will not be released until Phase 2. When that happens, Ethereum 2.0 will fully substitute all mainnet functions of Ethereum 1.0, including network state, transactions, smart contracts, and support for decentralized applications. PoS staking will replace PoW mining on ETH 2.0.
When Phase 2 of the Ethereum 2.0 roadmap is complete, Ethereum may become the first cryptocurrency that will gain mass adoption. Its scalability will no longer be an obstacle for network performance, and its parallel architecture will make Ethereum a payments network with nearly instant transactions that will work everywhere where Internet connectivity exists.
Originally published at https://coinjoy.io.