The main problem that blockchains like Ethereum currently face is that every node on the network has to verify and execute every single transaction. There are two main ways to solve this issue: either by scaling vertically or by scaling horizontally.
Put simply, scaling vertically involves increasing the power of the network's nodes. While scaling horizontally basically means adding more nodes to the network. For purposes of decentralisation, blockchains need to scale horizontally.
Ethereum's goal is for nodes to be able to run on consumer hardware- it will do this by what is known as 'sharding'- which we'll discuss below.
Shard chains
The Ethereum blockchain will be split up into 'shard chains.' Each shard chain will have its own subset of nodes which will only validate transactions in that chain. This will make the whole network more efficient as a single validator doesn't have to handle all of the work alone.
You can think of shards as the blockchain's "hard drive."
This update will reduce the delays and congestion that we see on the Ethereum network today. Right now, Ethereum can support 30 transactions per second. The new shard chains will be able to conduct up to 10,000 transactions per second!
The next challenge Ethereum will face is maintaining the security of those shards and preventing malicious validators from taking over single shards. Part of Ethereum's solution to this involves randomly shuffling validators to avoid manipulation, as well as different fraud and custody proofs.
Many proof of stake networks have relatively small sets of validators, which means network security is decreased. But after its upgrades, Ethereum will have a large set of validators, meaning it will be more decentralised, secure, and less open to manipulation.
How will these shards connect to the Beacon Chain?
'Crosslinks' are part of a planned upgrade that will connect the shard chains to the Beacon Chain. Put simply, a 'crosslink' is a reference in a Beacon Chain block to a shard chain block. If there are 64 shards, every Beacon block can contain up to 64 crosslinks or references.
What do the upgrades mean for Ethereum holders?
ETH holders don't need to do anything to prepare for the upgrades. There is no ETH 2.0 token and your ETH won't need changing or upgrading after the Merge. (Note: anything telling you otherwise is likely a scam, so be careful).
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