Is it Really Possible for Ethereum 2.0 to Go Live in 2022?
Can we expect Ethereum 2.0 to go live in 2022? Will it be able to grow? In other words, what will the world look like once Ethereum 1.0 has been completed?
Although the current market climate makes Ethereum appear undervalued, its fundamentals remain strong. Let’s have a look at what ETH 2.0 is and when we can expect its new features to be widely available.
In recent years, Ethereum has been plagued by scalability concerns, making it the second-largest blockchain network in the world by market capitalization. To put it another way, blockchains relying on the proof-of-work consensus method can’t handle more than a few thousand transactions per second.
A new consensus method called proof-of-stake is currently being implemented on the Ethereum network as a replacement for the current proof-of-work consensus mechanism.
Ethereum’s Sluggish Internet
Decentralized ‘global computers’ were the goal of Ethereum’s introduction in 2015. It would be possible to build many decentralized applications on the blockchain thanks to its consensus mechanism, similar to how a cloud is deployed but with the added benefits of security and decentralization.
Individuals rapidly began inventing tokens on the Ethereum network that had no use other than to swindle investors, resulting in the ICO mania. Blockchain transaction throughput increased by 15 transactions per second due to this surge in new users. This resulted in rising cost of using the network as the network got overloaded.
Transactions on the Ethereum network are subject to a “gas” fee, which is a sum of Ether paid to the parties that process them. These difficulties stem from the fact that all transactions must be broadcast to the network for every block, and only one node can be considered safe because it has access to all blockchain data. As a result, transaction throughput cannot be directly scaled without raising the size of individual blocks, which encourages centralization owing to the difficulty of accessing it.
For each transaction, the gas fee is immediately taken from Overload Miners, making them the primary determinant of gas prices on the network. In general, transactions with a greater gas cost are accepted more quickly than those with a lower gas cost, as miners prioritize bigger profits.
It’s not uncommon for transactions to pile up in the memory pool, which is where pending transactions are stored. Consequently, transactions with greater gas prices are given higher priority, and the transaction with the lowest gas price is increased for confirmation by miners. Thus, when the network becomes increasingly crowded, gas fees soar, further exacerbating the already dire situation.
How Ethereum intends to grow in the future
This is just one of the concerns that Ethereum’s developers anticipated, with limited scalability being one of the first issues to be addressed on the network. Upgrades are challenging on a network that is still heavily used every day because it has only grown in size.
In addition, unlike a centralized network, Ethereum cannot be “paused” for improvements. Scalability issues have arisen as a result of this, as the consensus mechanism — the brain — of the global computer has been upgraded. The most significant change is a move to proof-of-stake, a new consensus mechanism. When it comes to Proof-of-Stake (PoS), the rules are based on more fundamental principles. The mechanism of consensus places a high priority on identifying and removing bad players that prevent consensus from being reached. This is referred to as Byzantine Fault Tolerance and is essential to the seamless operation of the blockchain.
As a way to limit the number of bad actors, proof of stake tries to make the bad actors put their money where their mouth is. Validating nodes are required to put a particular number of Ethereum into a smart contract, which establishes the strength of the party’s vote on the blockchain based on that amount of ETH’s stake. To ensure that all parties on the network have access to the same shared history, these validators are given the authority to propose new blocks, with a consensus obtained after a round of voting.
When it comes to consuming power, this is better for the network’s economy. Instead of an inflationary model, the network can use a deflationary one because new coins aren’t continually being created to encourage miners.
Additionally, transaction throughput can be enhanced because validators are only required to have a copy of the current state of transactions on the chain, not the complete chain.
Blockchains that are based on Proof-of-Stake (PoS) technology are more scalable and sustainable over time, and are also more resistant against 51 percent attacks. Ethereum’s implementation, on the other hand, appears to be a long way off at this point.
What Should We Expect From Ethereum 2.0
The “beacon chain” was launched in December of 2020 as part of the ETH 2.0 program. In the future, the beacon chain will act as the proof of stake blockchain for Ethereum, a separate Ethereum network The network of beacons maintains and controls the registration of validators and organizes the “shard” chains, which will be discussed in the following paragraphs. The “merge” is the next phase in the ETH 2.0 process.
Ethereum’s existing proof of work consensus mechanism will be combined with the proof of stake beacon chain during the merge, which was originally scheduled for implementation in 2021 but has now been moved to this year. The termination of proof of work on Ethereum and the end of ETH mining will be marked at this point.
What Are the Advantages of ETH 2.0?
ETH 2.0 has many advantages, including but not limited to the following:
Expenditure of Resources
To avoid speculation, we won’t go into the long-term benefits of ETH 2.0. Instead, we’ll focus on the short-term ones. At the outset, we should talk about how much energy the Ethereum network consumes.
Proof-of-stake only consumes a tiny fraction of the electricity required by a proof-of-work system. Using a proof of stake architecture for Ethereum appears to have minor downsides while also benefiting from low energy consumption.
The long-awaited network scaling is the second advantage of ETH 2.0. There will be no gains in scaling from the merge itself. Instead, it will take till the introduction of “sharding” before ETH sees significant gains in processing speed.
The use of “shard chains” is referred to as “sharding.”. There will be 64 shard chains in total, each with its own blockchain. Only data storage and access are supported by each shard chain, which does not have the ability to run code. In the context of shard chains, scaling can be seen as parallel processing, but the shards themselves are not able to run code.
Yes, Ethereum scaling is critical because of the high gas fees caused by network overload. However, Ethereum “layer 2” protocols provide more than adequate scalability options. Polygon, Arbitrum, Immutable, and a slew of other terms fall under the Ethereum “Layer 2” umbrella.
Due to the inherent scaling inefficiencies of Ethereum, these layer 2s have added variety and billions of dollars in valuation to Ethereum. However, sharding remains a much-needed efficiency boost to Ethereum’s foundation layer.
Better User Experience
With ETH 2.0, users on the most popular crypto platform can expect a better user experience. We can begin to envisage what ETH 2.0 would look like based on the rapid rise of ETH since the COVID-19 outbreak began. There will be an increase in the number of projects on the platform as scaling is eventually enabled.
Ether (ETH) currently accounts for around 17% of the cryptomarket, with Ethereum layer 2s accounting for a further 2% or so. ETH 2.0 has the potential to be a boon to the cryptocurrency industry. Ethereum is still the most widely used cryptocurrency, but there are a slew of viable alternatives. The most direct application of cryptocurrency, as provided by ETH, must be preserved for the industry’s early phases, notably decentralized finance (DeFi). Ethereum is the most tangible form of cryptocurrency, yet it stands on its own, and there are many more interesting projects in development. ETH 2.0 is a significant step forward in the development of altcoins at this point in time.
Ethereum’s product rollouts have a track record of “over promising, under delivering” . To be sure, Ethereum has more than delivered in terms of its contribution to cryptocurrency. However, many are hesitant to place their faith in its timescale.
However, progress is being made, and the threat of a “Ethereum killer” still seems to be a long time away. As things stand, it appears that this year will be the year that we finally get to see ETH 2.0.
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