Ethereum 2.0 renamed to welcome the “merger”

As we all know, Ethereum is a blockchain network that is undergoing important changes.

In recent years, decentralized applications (Dapps) and other forms of blockchain technology have achieved unprecedented development, and many of these technologies are built on Ethereum. A considerable number of major innovations in the field of decentralized finance (DeFi) are running on Ethereum.

The surge in demand for Ethereum network usage has exposed scalability issues, making Ethereum's transaction fees expensive. However, if Ethereum wants to become a platform leading the development of Web3, it must comply with economic principles, otherwise it will have no practical significance.

Therefore, "Ethereum 2.0" came into being. The focus of the "Ethereum 2.0" upgrade proposal is to solve the scalability problem. Under the premise of ensuring security and decentralization, by implementing various technical upgrades to achieve the entire "consensus upgrade", the transition from the proof of work mechanism (PoW) to the proof of stake mechanism (PoS), the speed, efficiency and scalability of the Ethereum network will be significantly improved.

Today, the Ethereum Foundation, a nonprofit organization led by the blockchain’s core developers that helps coordinate and fund the development of Ethereum technology, announced that in anticipation of the merger, the terms “Ethereum 1.0” (ETH1) and “Ethereum 2.0” (ETH2) will be phased out in favor of “execution layer” and “consensus layer.”

in short:

• Eth1 → Execution layer: responsible for processing transactions and data

• Eth2 → Consensus layer: responsible for handling PoS consensus

• Execution layer + consensus layer = Ethereum

• After merging “Eth1” and “Eth2” into a single chain, there will no longer be two distinct networks; there will only be one complete Ethereum.

• The terminology update only changes the naming and does not change the roadmap for Ethereum upgrades.

Why the rename?

User misunderstanding

The main problem with the term “Ethereum 2.0” is that it creates a fragmented mentality for new users of Ethereum, who may intuitively think that Eth1 came first and Eth2 came later; or that once Eth2 exists, Eth1 no longer exists, which is a misconception. By removing these two terms, all future new users can avoid misunderstandings.

accuracy

As the Ethereum upgrade roadmap continues to advance, "Ethereum 2.0" has become an inaccurate term. Careful and accurate choice of terminology can allow the widest audience to understand what is happening on Ethereum.

Fraud Prevention

Some malicious actors have attempted to use “Eth2” to deceive users by telling them that they can exchange their ETH for “ETH2” tokens or that they must migrate their ETH in some way before Eth2 can be upgraded.

By updating the terminology, this scam can be clearly eliminated and help make the ecosystem safer.

consistency

The Ethereum Foundation hopes to encourage users to move away from outdated terminology. By renaming, it will help create consistency and clarity across the ecosystem and make Ethereum more accessible.

Improving Clarity of Staking

Some staking operators are also using the “ETH2” ticker to represent ETH staked on the beacon chain. This is potentially confusing given that users of these services do not actually receive “ETH2” tokens. There is no “ETH2” token, it simply represents a share in the “stake” of that provider.

How is the upgrade going?

It is not accurate to imagine "Ethereum 2.0" as a single blockchain. It can be seen as a "set of upgrades" that include the creation of a new chain called the "beacon chain" and sharding. Sharding can include up to 64 chains, and the main network will be "merged" with these parallel systems. In simple terms, it is divided into three stages, namely the beacon chain, merger, and sharding. Although the technical upgrades involved in each stage are developing in parallel, the current order is beacon chain → merger → sharding.

Beacon Chain (already online)

Previously widely referred to as Phase 0 of Ethereum 2.0, the PoS beacon chain went live in December 2020. The beacon chain is designed to manage or coordinate the expansion of shards and PoS network staking, where Ethereum users can lock their ETH in smart contracts to help secure the network. In exchange, they will receive returns from staking.

Merger (expected 2022)

Initially, the beacon chain ran separately from the current mainnet. While the beacon chain ran in parallel using the PoS consensus mechanism, the current Ethereum mainnet continues to be secured by the PoW consensus mechanism.

The merger is the final fusion of these two systems. When ready, the Ethereum mainnet will be "merged" with the beacon chain, and the mainnet will bring the ability to run smart contracts as well as the full history and current state to the PoS system.

This will mark the end of Ethereum's PoW consensus mechanism and usher in a more sustainable and environmentally friendly era. At this point, Ethereum will be closer to achieving the comprehensive, secure and sustainable goals described in its vision. Once the merger occurs, it will be up to stakers to validate the Ethereum mainnet. GPU mining will no longer be required, and previous miners may be able to invest in the new PoS system.

According to an information session held by ConsenSys, three researchers working on the merger technology believe that merging the Ethereum mainnet with the PoS beacon chain will reduce the network’s energy usage by at least 99.95%.

Additionally, the merger will ease:

• The PoW consensus mechanism is not sustainable and cannot scale in the long term.

• The PoS consensus mechanism makes it easier for more users to participate in the network, not just large miners.

It is worth noting that once the merger is complete, a “triple halving” may occur. The “triple halving” is named by the community as a tribute to the “halving” of Bitcoin production, indicating that once the merger occurs and Ethereum is fully upgraded to PoS, the issuance of ETH will drop significantly. Under the current PoW model, Ethereum issues approximately 13,500 ETH per day - an annual issuance of approximately 4.3% of the total ETH supply chain. However, the PoS model is determined by the amount of ETH actively staked on the network. According to predictions, when the “merge” occurs, the issuance rate will drop significantly. When the “triple halving” is combined with the destruction mechanism of EIP-1559, it is expected that Ethereum’s issuance will actually become deflationary during periods of user activity.

Despite a lower issuance rate for ETH and fewer block rewards, a more equal distribution of network rewards will benefit more users.

Sharding (expected 2023)

The original plan was to deal with sharding before the merger - to solve scalability issues. However, as Layer 2 scaling solutions flourished, developers shifted their priorities to the merger, so sharding needs to be continuously evaluated based on the subsequent development of Ethereum. Given the roadmap centered on Rollups, the urgency of sharding chains is debatable.

Sharding is a common concept in computer science - the process of splitting a database horizontally to distribute the load. In Ethereum, sharding will reduce network congestion and increase transactions per second by creating new chains called "shards."

In general, sharding is a better scaling solution than simply increasing the size of the existing database, as the latter requires validators to upgrade to more powerful and expensive computers. With sharded chains, validators only need to store data for the shard they are validating, not the entire network. This speeds up the Ethereum network and greatly reduces hardware requirements.

Sharding will eventually allow validators to run Ethereum on laptops or even mobile phones, and more validators will be able to participate and run in a sharded Ethereum. So this will improve the security of the Ethereum network, because the more decentralized the network, the smaller the attack surface.

Will the merger happen this year?

In the more than one year since the beacon chain went online, "Ethereum 2.0" has indeed made some progress, and developers have taken a big step towards the final version of Ethereum.

Although for individual validators, the minimum threshold for participating in staking is 32 ETH, the lock-up time is too long and cannot be redeemed in the short term, which is a relatively large disadvantage. However, the staking services provided by some crypto exchanges and the popular "ETH Liquidity Staking" project in recent months have changed the situation. The amount of ETH staked on the beacon chain has reached about 9.27 million, accounting for 7.88% of the Ethereum supply, which is more than 17 times the original target and about 3 times the same period last year. The number of verification nodes on the beacon chain has exceeded 280,000. (Data chart from OKLink)

As we move into 2022, according to the schedule, we may see the merger of the execution layer (ETH1) and the consensus layer (ETH2) this year, as well as the cleanup after the merger. For example, after the merger, the staked ETH will not be redeemable. These details will be upgraded separately shortly after the merger.

Last December, Ethereum core developer Tim Beiko announced the launch of the merged testnet (long-term) Kintsugi, whose main purpose is to familiarize the community and project developers with the Ethereum merged environment. Connecting to the testnet is easy, and the MetaMask wallet can directly select the Kintsugi testnet from the network list. The testnet has a simulated funding faucet function where users can try to trade with 50 ETH. For users who do not use MetaMask, there are several other options for connecting to the testnet.

According to official documentation, if the test is stable, the next step will be the transition of the Ethereum mainnet to PoS, that is, the merger of the beacon chain and the mainnet.

In the same month, Superphiz, a security consultant of the Ethereum beacon chain community, said on his personal social media that the Ethereum fork Bellatrix (formerly known as The Merge) will activate the merger of the current mainnet and the beacon chain, but will not immediately enable the redemption mechanism for staked ETH on the beacon chain. It is expected that the redemption of staked ETH will be opened about 6 months after the merger. He expects that Bellatrix will be implemented in June 2022, and the redemption of staked ETH on the beacon chain will be opened in December.

Driven by many reasons, "Ethereum 2.0" will become an important upgrade of the Ethereum network, and the crypto industry sees it as the key to solving the scalability problem. Without the support of new features such as PoS, sharding chains and beacon chains, Ethereum will eventually be unsustainable and lose its leading position as a smart contract platform in the crypto ecosystem.

As ordinary users, we still have to wait, but it is gratifying that everything is progressing in an orderly manner. From the hard work of developers to the Ethereum Foundation's promotion of a name change to make the entire ecosystem more consistent, Ethereum is getting better day by day.