Ethereum Co-Founder Vitalik Buterin announced that the transition from the current version of Ethereum 1.0 to Ethereum 2.0 will take place on December 1, if the necessary conditions are met. Before we look at Ethereum 2.0, there are two important concepts to mention: Proof of Work and Proof of Stake. For more information on Proof of Work, you can click here, and for more information on Proof of Stake, you can click here.
What Is Proof of Work?
In short, Proof of Work is a consensus mechanism on blockchains. In Proof of Work, miners compete to decode transactions in the fastest and most accurate way with the random hashes they generate. For that purpose, high energy and processing power is consumed. The solution of the miner who succeeded is spread over the network and after being verified, processed into the blocks. The existing Ethereum 1.0 blockchain network works with the Proof of Work consensus mechanism. For more information, you can click here.
What Is Proof of Stake?
In short, Proof of Stake is a consensus mechanism put forward to solve the excessive energy use and scalability problems of the Proof of Work consensus mechanism. In Proof of Stake, there are validators instead of miners. Unlike the Proof of Work consensus mechanism, expensive mining hardware is not required to become a validator. By staking cryptocurrencies on the blockchain network, validators confirm transactions and earn transaction fees. Since there is no mining in the Proof of Stake consensus mechanism, there is no mining reward. For more information, you can click here.
Transition to Ethereum 2.0
Ethereum plans to migrate from the current version 1.0 to the new version 2.0. With Ethereum 2.0, the Proof of Stake consensus mechanism will replace the current version’s Proof of Work. The energy consumption will be reduced and scalability will be increased, which is the network’s ability to handle more transactions. In Proof of Stake, there are validators instead of miners. As a result of this transition, mining activities on the Ethereum blockchain will be terminated. However, there are some requirements for this transition to take place. Firstly, there must be 16,384 validators on the network by December 1. To become a validator, 32 ETH must be staked on the Ethereum blockchain. To meet the 16,384 validators requirement, the total required amount of ETH is 524,288. As of this writing, a total of 61,376 ETH is staked. The number of validators remaining for the transition to Ethereum 2.0 is 14.466. If the targeted number of validators cannot be reached by the specified date, the process will be postponed until the number of validators is reached.
Technical Specifications of Ethereum 2.o
According to the Ethereum 2.0 transition announcement, validators that will verify 1 block every 6.4 minutes will be randomly selected by the Proof of Stake consensus mechanism. And it is stated that a distribution will be made in such a way that the validators process an average of 1 block in 2 weeks. In Ethereum 2.0, validators will be automatically selected by the software.
Ethereum 2.0 is expected to be a solution to scalability, which is one of the most important problems in the Ethereum network. Due to the transaction density in the network, an average of 15 transactions per second (15 TPS) can be processed in the current version, Ethereum 1.0. With the new version, the transaction speed is expected to be 1000-1500 TPS and the increasing transfer costs are expected to decrease drastically.
Ethereum 2.0 Implementation Phases
The Ethereum 2.0 process will proceed gradually and will be completed in 3 phases, which are as follows:
The Beacon Chain - (December 1, 2020)
Shards - 2021
Docking - 2021/2022
The first phase, the Beacon Chain, requires a total of 16,384 validators and a total of 524,288 ETH staked by them. This phase, which started after the speech of Ethereum co-founder Vitalik Buterin, will be completed on December 1 if the conditions are met. Phase two, the Shards phase, is scheduled for 2021. Sharding means splitting the database to distribute the load on the network. The process of Sharding will reduce congestion in the network and create new chains called Shards to increase TPS. In the final phase, the Docking, the existing Ethereum mainnet will be fully integrated with the Ethereum 2.0 upgrade. During this phase, all data from Ethereum 1.0 will be transferred to Ethereum 2.0, and the definitive transition from Proof of Work to Proof of Stake will be completed.
*Why Switch to Ethereum 2.0?
One of the top reasons for developers to switch from the Proof of Work consensus mechanism is the increasing risk of centralization risk for cryptocurrencies using Proof of Work.
Control of blockchains working with the Proof of Work consensus mechanism is increasingly moving away from the crypto community and passing to a small number of users with the massive hardware required for mining. Due to this centralized control, many cryptocurrency projects are moving away from their decentralized structures.
Another reason to switch from Proof of Work to Proof of Stake is to solve the scalability problem and avoid high energy costs. The major advantage of the Proof of Stake consensus mechanism, which does not have a mining system, is that it does not require expensive hardware and does not have high energy costs. The cost of running the networks with the Proof of Work consensus mechanism has recently become as costly as powering millions of homes. On the other hand, in Proof of Stake, only staking cryptocurrencies is required.
