Heard about Ethereum 2.0/ETH 2.0 and The Merge, but still not really sure what it all means?
Well, here's a simple explanation and breakdown of Ethereum's planned upgrades.
So, in Ethereum's own words, the multi-phased upgrade to the existing Ethereum blockchain is designed for:
Upgrading Ethereum to radical new heights...The vision is to bring Ethereum into the mainstream and serve all of humanity, we have to make Ethereum more scalable, secure and sustainable.
Why the upgrades?
Back in 2013, Vitalik Buterin published Ethereum's whitepaper "A Next-Generation Smart Contract and Decentralized Application Platform." And in 2015, Ethereum was launched.
The network has seen a lot of success since then, but from the start, it's been expected that a few key upgrades would be necessary for it to reach its full potential.
Recently, high demand and more uses have driven up transaction fees (gas fees) and caused congestion on Ethereum. This means that right now, ETH transactions are extremely expensive and slow.
Also, the proof-of-work consensus mechanism that currently validates ETH transactions and keeps the network secure has a significant negative environmental impact.
Ethereum's planned upgrades aim to fix these problems to make the network more scalable, secure, and environmentally sustainable!
Ethereum will see some fundamental changes to its structure and design as part of these upgrades. The two main changes include a movement to 'proof of stake' and the introduction of something known as 'sharding.'
Ethereum's future goals
1. More scalable
In their own words: 'Ethereum needs to support 1000s of transactions per second, to make applications faster and cheaper to use.'
As more and more users joined Ethereum, the network's efficiency declined. This means the network is currently plagued with congestion issues, and some smaller transactions are priced out; it can cost hundreds of dollars in gas fees to complete a single transaction!
Ethereum must become much more scalable to be able to deal with the increasing number of users and transactions on its network.
2. More secure
'As the adoption of Ethereum grows, the protocol needs to become more secure against all forms of attack.'
Ethereum needs to be able to increase its scalability while maintaining its core values of privacy, security and decentralisation.
To do this, improvements will be rolled out slowly overtime to make sure decentralisation is maintained. Achieving scalability and security while maintaining decentralisation is known in crypto as the 'scalability trilemma.'
3. More sustainable- Green Ethereum
'Ethereum needs to be better for the environment. The technology today requires too much computing power and energy.'
As part of what's known as 'The Merge,' Ethereum will switch to a proof of stake consensus mechanism, which is much more energy-efficient than the proof of work mechanism it uses right now.
With proof of work, transactions are processed by a network of computers that compete to solve mathematical puzzles, in return for rewards in ETH. This mechanism is, unfortunately, highly energy-intensive and involves a lot of unnecessary computational work. In fact, the mathematical problems that the miners compete to solve serve no purpose other than maintaining the network's security.
Proof of stake is an alternative mechanism that allows blockchains to run in a more energy-efficient way, using less electricity while making sure security and decentralisation are still maintained.
The removal of the mining process means less computational energy is used, and less competition occurs. So the speed of transactions also tends to be quicker, and the cost more affordable.
It's been claimed that the movement to proof of stake could cut Ethereum's network energy by at least 99.95%!
So, what actually are the upgrades?
Ethereum's roadmap lays out a set of interconnected upgrades that will help to make the network more scalable, secure and sustainable. Each upgrade has different requirements that will determine when they will be put in place, so they won't all be released at the same time.
Also note that some of these upgrades are separate from the main Ethereum network we use today, but they won't replace it. Instead, the Ethereum Mainnet will simply 'merge' with the new parallel system that's now being gradually created.
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