The Ethereum, as a platform for developing software that utilizes blockchain, is getting a significant upgrade in the form of Ethereum 2.0 or serenity or eth2. But what is Ethereum 2.0 and How can you benefit from it?
Let’s find out.
What is Ethereum 2.0?
As announced by the creator of Ethereum, Vitalik Buterin, Ethereum 2.0 is a crucial upgrade to the existing Ethereum blockchain.
The primary aim is to increase the speed and efficiency while enabling scalability to the Ethereum network. The serenity upgrade will address the existing bottlenecks and increase the number of transactions over time.
But what are the major changes to the Ethereum blockchain? The two fundamental changes are the use of Proof of Stake and Sharding.
Proof Of Stake
While in proof of work miners expend energy in the form of electricity to mine blocks into existence, proof of stake validators commit stake to validate blocks into existence.
Validators, the participants on the network that run the nodes, stake crypto (here, ETH) on the network and then make themselves available to be randomly selected, in order to propose a block.
The other validators on the network can then attest or agree that they have seen the block. Once enough attestations are received, a block is mined.
Validators receive rewards for both proposing and making attestations. This way, miners do not have to worry too much about the costs of mining, the barrier to run a node is lower in the case of Proof of Stake blockchain miners.
But, to run a validator node for Ethereum 2.0, the minimum amount required as the stake is 32 ETH. This might be too much for some miners, so they prefer pooling.
Sharding, in Ethereum, means parallelizing in simple terms. It refers to splitting the Ethereum network into multiple portions called ‘shards’. Each shard would maintain its unique set of account balances and smart contracts.
These three chains will form the backbone of Ethereum 2.0:
- Main Chain: This is the original Ethereum blockchain.
- Beacon Chain: This level will be dedicated entirely to overall coordination and validation using the PoS consensus.
- Sharding Chain: This level includes smart contract executions and data storage.
Sharding enables Ethereum 2.0 network to scale. Before sharding, all validator nodes had to chip in to attest before bringing a block into existence. This became both resources heavy and time-consuming.
If we add sharding to the mix, Ethereum 2.0 becomes both more secure and more efficient. It is no longer bottlenecked by the slowest participant’s speed, as tasks will be split up between sets of nodes instead.
Thus, each node will only be responsible for verifying data on the shard it’s working on only. Nodes can also switch shards to avoid manipulation.
Sharding and switch to proof of stake make Ethereum 2.0 much faster and reliable than its predecessor.
How can Ethereum 2.0 be beneficial for you?
There are many benefits to be enjoyed once Ethereum 2.0 starts rolling out. Based on how you wish to participate, the benefits vary widely.
If you are a miner with capable hardware or looking forward to being a cryptocurrency miner, Ethereum 2.0 would benefit.
Abandoning proof of work means you won’t have to worry too much about your hardware’s hashing power. As proof of stake randomly selects validators from available nodes, you can stake 32 ETH and participate.
Due to the highly scalable nature of the Ethereum 2.0 network, you will find that there are more rewards to be had for participation compared to other blockchain networks.
Ethereum 2.0 is built with scalability in mind. The bottlenecks have been worked on, and serenity will bring a faster, highly scalable cryptocurrency platform for developers.
Being open-source, developers can utilize the Ethereum 2.0 network to the fullest.
With the added advantages and stability, Ethereum 2.0 attracts even more investors.
Once transfers on the eth2 blockchain are enabled, it will become like a “perpetual debt- and equity-like bond” with a floating rate. Essentially, validators will be able to enter and leave the scheme as they please.
If you see cryptocurrencies and blockchain as the future, exciting times lie ahead. With Ethereum 2.0, called as the serenity update or ether2, we are going to see a significant overhaul of the Ethereum network.
The changes will enable faster and safer transactions, and scalability for applications developed based on the Ethereum 2.0 network.
For investors, miners and developers alike, Ethereum 2.0, once fully rolled out, will be one of the best ways to go about their work.
I hope this article helps you and if you have any queries related to it then do leave your comment below. If you have not joined our community then you can now. We are very active there and have been sharing important information there.
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