Ethereum 2.0, dubbed as Serenity, is the forthcoming major upgrade to the Ethereum blockchain.
With the number of active Ethereum wallets more than doubling since January this year, it is clear that the crypto community highly anticipates this launch.
Several upgrades have been worked on the Ethereum protocol since its inception. This time, three large-scale enhancements will be introduced: Beacon Chain — a proof-of-stake network, Shard Chains — a scaling tool, and eWASM — a new and improved virtual machine.
Ethereum 2.0 will be rolled out in three phases, each of them adding one of the aforementioned enhancements. As of May, it appears that the project has had some delays in hitting milestones.
Phase 0 is now expected to launch in 2020 while Phase 1 is anticipated to be deployed in 2021. Phase 2 could happen either in late 2021 or in 2022. Beyond that, the roadmap becomes blurry.
Purpose of Ethereum 2.0
The objective of Serenity is mainly to enhance the scalability, transaction throughput, and security of Ethereum.
One of the biggest challenges for all major blockchains is scalability. Ethereum’s proof-of-work system can only go up to 17 transactions per second (TPS), which is relatively slow compared to traditional payment systems. After all, Visa could perform beyond 20,000 (TPS).
And the biggest hurdle of it is not the scaling itself. Many other proof-of-stake blockchains have managed to reach a thousand tps, but they have to make tradeoffs.
What makes Ethereum’s goal hard to achieve is that they are trying to scale without compromising other vital features like decentralization and security. Fortunately, the Ethereum dev team believes that they could achieve this feat in Ethereum 2.0.
The development of Serenity is guided by five design principles to further place Ethereum at the forefront of the crypto industry.
Five Design Principles of Serenity
Since both the proof-of-work (PoW) and proof-of-stake (PoS) chains will work side by side through Phase 0,1, and 2, the former still needs to be maintained. Consequently, the Ethereum miners will still be rewarded in ETH for the blocks they mine.
Moving forward, the Ethereum system will slowly move away from the PoS chain and into the Beacon Chain (covered in the next section). Will the PoW chain become obsolete? That isn’t finalized yet since some members of the Ethereum community insist that it remains permanently.
Ethereum 1.x still does not have a definitive roadmap, but it has recognized four goals:
- Boost the mainnet chain and make it more scalable by increasing transaction throughput (TPS) through client optimizations.
- Ensure the sustainability of ‘regular users’ running full nodes by reducing disk space requirements.
- Make development easier through virtual machine upgrades like eWASM, as well as alternative transaction fee models.
- Link Ethereum 1.0 and 2.0 using the Beacon Chain.
Beacon Chain (Serenity Phase 0)
In the first phase of Ethereum 2.0, we will witness the deployment of the Beacon Chain.
Ethereum is one of the most notable cryptocurrencies that popularized the applications of PoS algorithms in securing a blockchain’s consensus. Additionally, it fairly differs from the traditional PoW consensus mechanism. However, as of yet, Ethereum still operates as a PoW system.
The Beacon Chain is a PoS blockchain intended to become the new consensus algorithm for Ethereum. One could say it will be the backbone of the Ethereum 2.0 blockchain.
With that being said, the Beacon Chain will still work in parallel with the old consensus algorithm as a hybrid PoW/PoS consensus mechanism. This is to ensure that the transition will run smoothly and the chain remains coherent.
The Beacon Chain will have three primary responsibilities:
- Managing the stakers
- Adding randomness
- Managing crosslinks
Stakers validate the transactions within the new PoS chain. They are analagous to miners of the PoW network.
The Beacon Chain regulates a body of stakers that validate the Ethereum 2.0 system.
In order to become a staker/validator, a user needs to send 32 ETH as a stake to a contract on the PoW chain. After verification, the stake is locked up and the user’s node is enlisted in the list of validators on the Beacon Chain.
A proof-of-stake system protocol requires a bit of ‘randomness’ that is unbiased, verifiable, distributed, and of course, unpredictable. The Beacon Chain ensures that this randomness exists and that it extends to all parts of the PoS blockchain.
One of the major applications of this randomness is in choosing the next block producer/proposer.
A block is a term used to refer to a batch of transactions that have been validated at a given timeframe, and hence, officially added to the chain. In Bitcoin’s PoW system, the miner that solves a mathematical puzzle first gets to choose the next block.
In the Beacon Chain, there is no mining. Therefore, the next block producer is chosen randomly, as illustrated in the randomness mechanism.
Crosslinks may not be practically used in phase 0 of Ethereum 2.0. After all, its purpose is to bind the sharded blockchain together. And as you might know, sharding won’t be available until phase 1.
By then, the Beacon chain will be responsible in the operation of these crosslinks.
The present state of each ‘shard’ will be logged regularly in the Beacon Chain as a crosslink. Once the Beacon Chain block gets finalized, so will the corresponding shard block.
Shard Chain (Serenity Phase 1)
Shard chains is an essential feature of Ethereum 2.0. Without it, the Ethereum blockchain cannot scale.
Sharding is the process of dividing the processing responsibility of the Ethereum blockchain among various nodes. By dividing the blockchain’s state into ‘shards’, the system can execute transactions, store data, and process information in a parallel manner. This will greatly reduce the required storage space and processing power for individual nodes.
Essentially, one validator (selected through the ‘randomness’ mechanism) will be responsible for creating blocks, which will be voted on by a sharding committee, which is also randomly selected.
If the selected validator’s block receives enough votes, a crosslink between the shard block and the beacon chain is established. By then, the shard block will be added to the Beacon Chain.
The Beacon Chain will run 2014 shard chains, each of them validated by a group of 128 nodes.
The concept of sharding works inversely to the current Ethereum proof-of-work system, which needs all full nodes to process and validate each transaction.
In time, the Ethereum PoW chain will become the first shard for Ethereum 2.0. But before that time comes, the Ethereum 1.0 chain will carry on with its usual functions and undergo a series of enhancements to make suitable for the upgrade.
It needs to be noted that this will initially be a test run for the shard chain. Therefore, we cannot expect a fully-scalable Ethereum 2.0 just yet.
Phase 1 will also improve the finality of the system. Transaction finality in blockchain is the ratification that all correctly-processed blocks cannot be reversed once added to the chain. Shard chains add an overlay protocol that provides stronger finality guarantees.
eWASM (Serenity Phase 2)
A virtual machine, simply put, is an emulation of a computer system. It is vital for a part of a blockchain system, which enables the execution of smart contracts and transactions. The current virtual machine in the Ethereum ecosystem is the Ethereum Virtual Machine (EVM).Acc
In phase 2, it will be upgraded to Ethereum-flavored Web Assembly (eWASM), a new virtual machine for Ethereum 2.0. This EVM will enable the Beacon Chain to run smart contracts written in any language, instead of solely relying on Ethereum’s Solidity.
The development roadmap beyond Phase 2 is unclear. All we know is that the Ethereum dev community will continue to improve the protocol, as well as create solutions to unforeseen obstacles.
How to get Eth 2.0
Despite having two chains, no new token will be created. However, users are allowed to deposit ETH 1.0 in an ETH 2.0 contract. It needs to be noted that this transaction will be programmed to be irreversible. Therefore, once converted, you can no longer get your original Ether back to its previous state.
The main reason why users might want to do this is to be able to participate in the new proof-of-stake validation system and earn rewards. There are currently two ways to do this.
One is to run your own validator node by staking atleast 32 ETH on the Beacon Chain. But if you can’t afford 32 ETH, you still have the option to join a staking pool, which allows you to stake smaller amounts.
The Road Ahead
The initial rollout of Ethereum 2.0 is expected to occur sometime in July. According to an AMA with the Ethereum research team, they won’t begin the launch until three clients can successfully run testnets unimpeded for a minimum of eight weeks.
As of now, two testnets are live: Sapphire and Schlesi. The latter was launched in May 7 and currently has two clients validating transactions. More clients, such as Nimbus, have submitted a request to join the testnet.
If everything goes well, then an official multi-client testnet will be launched by the Ethereum Foundation. These testnets were created to expand the boundaries of the protocol and see just how far it can go.
So far so good.