Ethereum popularly referred to as ETH, is a decentralized system founded for trading as a digital currency and used on the Ethereum network to run applications. According to the official statement from Ethereum’s website “people all over the world use ETH to make payment as a store of value, or as collateral.” Ethereum is traded on exchanges as a digital currency as other cryptocurrencies in the crypto-sphere.
Since it launched in 2015, Ethereum has been putting a conscious effort towards achieving the goal of becoming a decentralized global network that could someday replace centralized applications.
Ethereum allows the distribution of smart contracts and decentralized applications (Dapps) to be established and run without any downtime, fraud, control, or intrusion from a third party. Ethereum formation came complete with its programming language which runs on a blockchain, allowing developers to create and run distributed applications. As a decentralized system, Ethereum cannot be controlled by any sovereign entity.
Back in 2014, Ethereum launched a presale offer for Ether, and it received a positive outburst from the crypto-sphere. So far, Ether is the main component that is needed to run commands on the Ethereum platform and it has been utilized by developers to create and run applications on the platform.
With the different phases slashed for the release Ethereum updates, the Ethereum 2.0 is currently the one-tech upgrade with the biggest impact on the crypto-sphere. So far in the crypto-sphere, Ethereum is one of the biggest altcoins, it has one of the world’s most popular smart-contract platform. With thousands of projects on the platform, and people building the virtual economy on the platform, the platform is routinely overloaded. Hence, this has made the transaction time slow and transaction fees expensive.
The congestion on the Ethereum network is not a cause for worry as it signifies the vast and growing global adoption of the cryptocurrency. With the update on the release of Ethereum 2.0, it is obvious that the platform is moving towards creating a substantial way of decentralization.
With the launch of Ethereum 2.0, the network is bound to encounter an overall variation in operation, which will be felt in the whole crypto-sphere. The development team of Ethereum is currently working on a vital upgrade that will accompany the Ethereum 2.0 release. The Ethereum 2.0 upgrade will re-structure the whole Ethereum network, thereby eliminating poor user-interface, expensive transaction fees, and slow processing periods.
The major issue the Ethereum network is currently encountering is scalability. This is due to the number of decentralized applications the network supports; hence it needs to process a high number of transaction speed per second. Over the last year, the network recorded transactions ranging from 12 and 45 transactions per second. With the surge in adoption of the Ethereum network, including the establishment of more Dapps and the implementation of more transactions, there has been an increase in the time to carry out transactions and the cost of transactions. Adding more nodes is not an option because it does not increase scalability, this is because each node needs to verify each transaction. Hence, this has made the Ethereum network slower than expected and less convenient to use.
Efforts are being made with the development of Ethereum 2.0 to increase scalability and achieve mass adoption. To achieve this, the team embarked on a process known as “sharding,” which they believe is the answer to network scalability. Off-chain solutions such as plasma chains and state channels might be employed to offload the main network and further increase scalability.
The Ethereum 2.0 implementation is scheduled for the summer of 2020 and might extend to another year or two until the three phases are procured. Part of the Ethereum 2.0 implementation includes transferring Ethereum from a proof-of-work to a proof-of-stake consensus. Since inception, Ethereum has operated on the proof-of-work consensus, the development team is moving the Ethereum data to a proof-of-stake consensus because it is believed to be more energy-efficient than proof-of-work.
In addition, staking won’t be a hassle on Ethereum 2.0 as there will be a minimum threshold of 32 ETH required to partake in staking. Staking rate is projected to be around 4-10%. Validators also will be required to run a validator node. Each validator will be expected to constantly be available online or face minor penalties termed slashing. This simply means a portion of the validator’s stake will be taken if found acting malicious toward the network.
Efficiency and environmental sustainability will also be tackled by Ethereum 2.0. Like Bitcoin (BTC) and other blockchain networks, Ethereum (ETH) runs on a proof-of-work (PoW) consensus protocol to secure the security of its network. With ETH 2.0, PoW systems will verify swiftly if a new block belongs to the chain or not. ETH 2.0 is undergoing reforms to modify several more general design goals, this is due to new and complex systems that will emerge from the introduction of Casper and Sharding.
These are one of the major design goals of ETH 2.0. The aim is to reduce network complexity to the barest minimum, even if it leads to some loss of efficiency. This is attainable due to the massive surge in throughput and efficiency allowed for by Sharding, Casper, and Ewasm. It will offset a small reduction in efficiency to ease the additional density required by these same systems.
Other designs to be incorporated include the use of cryptography and design techniques that will allow for the involvement of a large set of validators, both in total and per transaction carried out. In the same light, the design goal is to establish a system that permits a standard consumer laptop to process and validate a single shard. These goals are put in place to ensure that the Ethereum network remains secure and decentralized.
Although the launch date is yet to be scheduled, all that is certain now is that it will be released in four successive phases. Once each phase is executed, Ethereum 2.0 is projected to have the following features PoS consensus, fully sharded blockchain, and swift synchronization. The crypto-sphere is surely looking forward to the release of Ethereum 2.0.
Written by E.Jones, CNIR Staff
