Ethereum is currently (July 2021) the world’s second biggest Cryptocurrency, both in terms of market capitalization and popularity, behind Bitcoin. Ethereum’s market cap accounts for around 10% of the total crypto market capitalization (dominance out of all available cryptocurrencies combined) and has a massive list of existing crypto projects built on the network and using their smart contract functionality.
The 2.0 upgrade is coming but are you wondering What is Ethereum 2.0 ?
Ethereum 2.0 Upgrade
Ethereum 2.0 (also known as “Serenity” or “ETH2”) is the much anticipated, and long awaited, upgrade to the core Ethereum protocol.
The upgrade aims to increase stability, scalability and will bring economic changes as well. These improvements will be achieved by introducing Sharding, Proof of Stake, a new virtual machine (eWASM) and more, with implementation rolled out over three main phases (rather than all released at a single point in time):
- Phase 0 – Beacon Chain (late 2020);
- Phase 1 – Shard Chains; and
- Phase 2 – State Execution
The main scalability issue that many blockchains, including Ethereum, currently face is that every node needs to verify and execute every transaction. With the increased popularity and use cases, scalability is critical for mass adoption.
Sharding is an attempt to resolve this issue by the partitioning of large databases (blockchains) into smaller, faster ones resulting in the entire system being more scalable.
Sharding will be implemented in Ethereum 2.0 to speed up transactions and make network much more efficient than ever before. Initially, each shard will manage itself, have its own transaction history, and the effect of transactions in some shards will be limited to that shard only. However, it’s been flagged that later phases of Ethereum 2.0 (there are three primary phases to the rollout) will consider the possibility of cross-shard communications.
Staking – Proof of Stake (PoS)
In simple terms, Staking is the process of holding crypto in a Cryptocurrency wallet to support the operations of a blockchain network, in return for rewards paid in the crypto you are staking. In the case of Ethereum, staking will become available as part of the 2.0 roll out.
Why would I want to stake my ETH?
When staking your ETH and validating blocks in the blockchain, you will be rewarded with additional ETH through a network wide interest rate and also receive a portion of Ethereum network transaction fees. Further information can be found here, along with an ETH2 Staking Calculator.
What are the minimum requirements to stake Ethereum?
- A minimum of 32 ETH per node (validator);
- A computer with sufficient hardware specifications; and
- A stable internet connection or VPS.
Conclusion – What is Ethereum 2.0 ?
Hopefully we have helped to explain what Ethereum 2.0 is and a little more information about the upgrade and roll out. This article does not go into the detailed technical aspects but if you would like more information on this highly anticipated project please leave a comment below with further topics you would like us to go into more detail on.