5 changes that will be brought about by the Ethereum upgrade

Ethereum has been popular since its launch in 2015, but recently its expensive transaction fees and low scalability have had a negative impact on the execution of complex applications, and users are increasingly demanding improvements to Ethereum. Ethereum 2.0 has been underway for some time and is the biggest change to the Ethereum network in years, designed to address some of the issues with the current infrastructure. According to Ethereum founder Vitalik Buterin, the upgrade will accelerate the functionality of the Ethereum blockchain and promote mass adoption. This article will review the basic features of Ethereum 2.0 and explore what changes the upgrade will bring to the system.

What is Ethereum 2.0?

Ethereum 2.0 is not a one-time upgrade, but a series of changes to the network that will be completed over the next few years. Ethereum currently uses the same PoW consensus mechanism as Bitcoin. Although this mechanism is highly secure and decentralized, it has some obvious flaws. In the PoW blockchain, miners need to use high computing power to solve complex cryptographic problems (competing for the right to verify transactions), so on-chain transactions are slow. In addition, the competition for computing power increases electricity consumption, which is why Bitcoin is attacked by environmentalists.

Ethereum 2.0 will use the PoS consensus mechanism, in which validators do not verify transactions by solving mathematical problems with computing power, but need to lock the blockchain's native cryptocurrency in a smart contract. The network then randomly selects validators by analyzing a variety of factors, including stake size and duration. Currently, the beacon chain, the test platform for Ethereum 2.0, has more than 290,000 validators. According to current plans, the number of validators will continue to grow after the Ethereum network merges with the beacon chain in June this year.

Ethereum 2.0 is one of the most anticipated developments in the history of the blockchain community. If all goes according to plan, Ethereum may solve its scalability issues, increase accessibility for regular users, and enhance the functionality of decentralized applications.

Ethereum 2.0 will bring the following 5 changes:

1. Reduce transaction fees

High gas transaction fees are Ethereum's biggest problem right now. Gas fees refer to the fees paid to miners who expend computing power in verifying transactions. They are measured in "gwei" and fluctuate according to network demand. Usually, the Ethereum blockchain becomes clogged once transaction demand is high. In this case, miners prioritize transaction requests with higher gas prices, which drives up the overall gas transaction fees. As Ethereum moves to the PoS proof-of-stake mechanism, processing transactions will become simpler, which will effectively prevent unprocessed transactions from clogging the network.

2. Increase network throughput

Part of the Ethereum 2.0 upgrade includes the introduction of “sharding,” which will split the blockchain into multiple chains that can process transactions independently of the main chain.

PoW blockchains record transactions on a complete chain. For example, the Bitcoin blockchain records all transaction history since the genesis block was mined in 2009. However, the number of transactions that can be processed on a chain is limited. Bitcoin can only process 7 transactions per second, and Ethereum can only process 10-15 transactions per second.

Sharding will create newer chains based on the existing main chain. According to the Ethereum Foundation, the sharding process will divide the Ethereum blockchain into 64 different chains. Since these chains can all be used to verify transactions, the burden on the Ethereum main network will be reduced and the throughput of the entire ecosystem will be significantly improved.

3. Reduce hardware requirements

When Satoshi Nakamoto designed Bitcoin, he intended for everyone to participate in the transaction verification and recording system. However, changes in the system have made it very difficult for ordinary people to participate in network verification. The increase in mining difficulty means that expensive advanced computers must be invested in to ensure computing power. Ethereum is currently facing the same problem.

In addition, nodes must also hold a copy of blockchain records, which requires nodes to store about 4TB of data. At current market prices, a computer with more than 4TB of storage space costs about thousands of dollars. The high equipment threshold is not conducive to attracting more qualified validators to participate in the protection and construction of the network.

The introduction of the PoS consensus mechanism in Ethereum means that validators no longer need advanced devices with powerful computing power, but only server-level devices to verify transactions. Moreover, sharding will reduce the disk space allocated to store the history of the Ethereum blockchain. Since Ethereum will have 64 shard chains in the future, validators only need to save the history of one shard, which is 1/64 of the total data.

4. Expanding the Ethereum ecosystem

In addition to serving as a payment settlement system, Ethereum's programmability can also be used to create smart contracts and decentralized applications (dApps), powering industries such as NFTs and DeFi. Ethereum EVM is like a supercomputer that runs on different computers (nodes) in the Ethereum network. EVM stores the code that executes smart contracts and allows users to interact with dApps.

Although the EVM has greatly increased Ethereum’s network capabilities, its utility has declined in recent years due to increasing pressure on the ecosystem. Compared to when Ethereum was first launched in 2015, there are already many more dApps running on the network, including games (Axie Infinity, CryptoKitties), DeFi protocols (Uniswap, Yearn), and DAOs (MakerDAO), to name a few.

The increasing load on the EVM has caused the network processing speed to drop sharply. However, improving the EVM is difficult because the code is written in the complex programming language Solidity. According to the main participants in the development of the Ethereum network, Ethereum 2.0 will introduce the Ethereum Web Assembly (eWASM) designed by the World Wide Web Consortium to replace the EVM.

eWASM allows developers to choose other simpler coding languages, such as C++ and Rust. In addition, eWASM is designed to be compatible with current web standards, so it is easier to run in regular browsers. This will make it easier for users to access dApps from their browsers without relying on browser extensions. The biggest benefit of eWASM is its impact on the developer ecosystem. With other language options, more developers will flock to Ethereum, further promoting innovation and creativity in the community.

5. Reduce your carbon footprint

Ethereum's switch to a PoS consensus mechanism will reduce electricity consumption and reduce negative environmental impacts. In fact, the energy-intensive nature of PoW proof-of-work such as Bitcoin and Ethereum 1.0 has raised concerns among environmentalists and regulators. According to the Ethereum official blog, PoS will reduce Ethereum's power consumption by 90-95%. In addition, other expansion solutions such as rollups and sharding will also reduce the overall energy cost of transactions by expanding the network's economies of scale.

Ethereum 2.0 Progress

According to the information released by the Ethereum Foundation, Ethereum 2.0 can be divided into three phases:

Phase 0

Phase 0 begins with the launch of the beacon chain on December 1, 2020. The beacon chain introduces proof-of-stake consensus, and a full validator requires a minimum stake of 32 ETH. Currently, the total value locked (TVL) of the beacon chain is about $25 billion. The beacon chain will merge with the Ethereum main network in the second quarter of 2022. After the merger, the entire Ethereum network will switch to the PoS consensus mechanism.

Phase 1

According to the Ethereum Foundation's plan, Phase 1 will occur sometime in late 2022 or 2023. The upgrade in this phase will introduce sharding, but code development and auditing are difficult, so the specific time will be adjusted according to actual conditions.

Phase 2

The final phase of Ethereum 2.0 involves replacing the Ethereum Virtual Machine (EVM) with the Ethereum Web Component (eWASM). This will make Ethereum more accessible to users and developers. For users, built-in browser support will make the use of decentralized applications more convenient. For developers, the freedom to use other languages ​​will make application development for the Ethereum blockchain easier.

Is Ethereum 2.0 the ultimate solution?

Although it is still unknown whether Ethereum 2.0 will be successful, the many changes and overall signs that the Ethereum 2.0 upgrade will bring are relatively positive. If the upgrade is successfully implemented, it will completely change the fundamentals of Ethereum. With lower gas fees, higher accessibility and better user experience, Ethereum is likely to become the leader in the field of blockchain technology.