A brief analysis of Ethereum 2.0 technology: Beacon chain and sharding

Just last July 31, Ethereum, the second largest cryptocurrency by market value, celebrated its 5th anniversary. With the continuous development of Ethereum, the attention of all walks of life to Ethereum is also increasing. The continuous surge in users and applications has also led to a growing call for Ethereum 2.0.

What is Ethereum 2.0?

Ethereum 2.0 is the planned replacement for Ethereum.

With the rapid rise of projects such as DeFi, the transaction volume on Ethereum has continued to surge, which has led to rising transaction fees and longer transaction times. In general, the current Ethereum 1.0 can no longer meet the usage and development needs of users.

In April this year, the beacon chain created the genesis block and the "Phase 0" test was officially launched. Danny Ryan, the launch coordinator of the Ethereum 2.0 network, also preliminarily announced in the forum that the final test network of Ethereum 2.0 is expected to be officially launched in early August. This also means that Ethereum 2.0 is just around the corner.

Here are the design goals of Ethereum 2.0:

Figure 1

1. Make it simpler, even if it affects some efficiency

2. Stay alive when major network partitions occur and most nodes go offline

3. Choose components that are resistant to quantum computing or use components that can be replaced with quantum-resistant components in the future

4. Use encryption technology and enable validators to participate in more blocks per unit time

5. Enable any consumer-grade PC to participate in sharding processing

To achieve these goals, Ethereum 2.0 uses technologies such as beacon chain, sharding, POS and eWASM. Let's first take a look at what Ethereum 2.0 will look like after it is fully implemented, as shown in the figure below:

Figure 2

The entire Ethernet 2.0 is divided into four layers:

1. POW main chain layer: that is, the single chain of Ethereum 1.0. As the bottom foundation, during the transition from Ethereum 1.0 to 2.0, the value (Ether) in Ethereum 1.0 will be gradually transferred to the beacon chain. When the transition to Ethereum 2.0 is completed, it may be used as a shard chain, or it may continue to be retained. There is no conclusion yet.

2. Beacon chain layer: This layer will eventually be the management layer of the shard chain, responsible for managing the shard chain and participating in the intercommunication between shard chains. It will also involve value transfer in the transition stage.

3. Sharding chain layer: 64 different chains communicate with the same beacon chain, store data, run contracts, etc. Each chain is equivalent to an Ethereum 1.0.

4. Virtual machine layer: eWASM virtual machine, the execution environment for running smart contracts, is built on shards.

Key technologies of Ethereum 2.0

Given the characteristics of blockchain such as immutability and the huge impact of vulnerabilities (The DAO), the transition period from Ethereum 1.0 to 2.0 will last about 2 years and will be carried out in stages.

Phase 0: Mainly realizes the partial value transfer in the beacon chain and Ethereum 1.0.

Phase 1: Mainly implement sharding and steadily transfer digital assets on blockchain 1.0 to sharding

Phase 2: Mainly implement the eWASM virtual machine

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Since the specific implementation of Phase 2 is still unclear, we will mainly conduct a simple analysis of the technical implementation of Phase 0 and Phase 1.

Beacon Chain and POS

The beacon chain is a single blockchain based on the POS (Casper FFG) mechanism.

When implementing the Casper FFG consensus, two roles are defined: "validator" and "proposer". If a node wants to become a "validator", it needs to pledge at least 16 ETH to a smart contract in Ethereum 1.0. The smart contract triggers an event, and the beacon chain detects the event and adds the address to the "validator" list.

The beacon chain randomly assigns "validators" to shards to perform tasks. When generating blocks, the beacon chain randomly selects "proposers" from the "validators". The "proposers" propose blocks, which are then verified by the "validators". The beacon chain monitors all "validators" and "proposers". If they complete their tasks honestly, they will be rewarded (equivalent to mining). If they do evil, their pledged ETH will be confiscated.

When implementing the beacon chain, it is defined that the data stored on the beacon chain is the world state on the shard chain. When the world state on the shard chain changes, a new block will be generated on the beacon chain. Only the world state of the shard recorded on the beacon chain is recognized as irreversible block data, as shown in the following figure: (blue represents the beacon chain; green represents the shard chain; yellow represents the shard chain block that has been confirmed by the beacon chain)

Figure 3

Sharding

Shards are different sub-blockchains.

The implementation of sharding is actually based on addresses. Here we can assume that we define the address starting with 0x00 as shard 1, and the address starting with 0x01 as shard 2. And so on, we can have 16*16=256 shards.

When node 1 is assigned to shard 1 by the beacon chain, node 1 will only package and trade transactions with addresses starting with 0x00, and will directly discard transactions starting with other addresses. In this way, different shards are abstracted, and the entire blockchain is abstractly divided into different shards.

Ethereum 2.0 Outlook

Ethereum 2.0 will be a completely different system from Ethereum 1.0, and may be officially launched in the next few years. We should understand its functional characteristics before Ethereum 2.0 is officially launched, so as to better welcome the new wave of blockchain.