For a long time, Bitcoin was the sole crypto tender available for users that had a hectic and power-consuming mining process. Applications were also limited at that time. But, in 2015, everything changed as the Ethereum network burst into the scene. Its extravagant features opened numerous opportunities that were previously unperceivable.
But, Ethereum’s Proof-of-Work nature meant processing transactions was a matter of power consumption, which had caused an uproar among advocates of climate change. With newer blockchains adopting a lesser energy-intensive Proof-of-Stake mechanism to process transactions, Ethereum faced competition, giving rise to the ideation of Ethereum 2.0. While “The Merge,” the starting point of Ethereum 2.0, is unfolding, there is no better time than now to look at how much it means for the Web3 space.
Ethereum 2.0: An Introduction
Ethereum 2.0 is an upgraded version of the existing Ethereum blockchain. The update from Proof-of-Work (POW) to Proof-of-Stake (POS) essentially means that the current network will be merged with another test network called “Beacon Chain,” developed by the Ethereum network’s developers. That is why the process is known as “The Merge,” and Vitalik Buterin, Ethereum’s founder, has more to make the network the perfect spot in Web3. The upgrade to Ethereum 2.0 will also combat issues currently faced by the Ethereum main network, which we will view in a later section. The process is followed by “Shard Chains,” which will complete Ethereum 2.0.
Ethereum 2.0: The Stages to Bring It to Life
- Everything started with the Beacon Chain, launched in December 2020 as a separate POS network by Ethereum’s developers. The blockchain has been working on setting things up for validators to stake, making other notable elements of Ethereum, such as smart contracts, not present.
- The Merge in September 2022 will mark the merging of the Beacon chain with the Ethereum mainnet, making Proof-of-Stake valid for the whole network. This creates what the community calls “Ethereum 2.0,” formed through the absorption of Ethereum 1’s blocks by the Beacon chain.
- There are two fork events in the Ethereum mainnet that will make the Merge complete. The first one, Berlin Hard Fork, took place in April 2021. The next one, London Hard Fork, will change the basis of gas fee charges. The changes will be based on the EIP-1559 protocol, which will burn gas costs and offer tips to miners as an option.
- The Altair Hard Fork will be the first fork for the Beacon chain that will change how rewards and penalties are distributed to the validators.
- After all the hard forks occur, the absorption process will take place to launch a new-face Ethereum network running on the POS mechanism.
Exciting Updates Post Ethereum Merge
- Further changes after the Merge are mentioned by Vitalik Buterin that will result in the progression of the network to reign in the pole position of the Web3 world.
- The Surge will create shard chains that will be useful for increasing the network’s scalability.
- The Verge will ease how users validate transactions by eliminating the need for user machines for storage, making the network more decentralized.
- The Purge will be similar that will try to reduce the need for user machines for data storage, driving Ethereum towards utmost decentralization.
- The Splurge will be for other activities that could apply the network’s efficiency to run featureful applications.
Ethereum 2.0: The Key Features
- Scalability – Ethereum 2.0 will increase how many transactions per second (TPS) can be made possible. This is paramount as making users of decentralized applications wait for transaction processing will take out the goal behind decentralization.
- Security – While security has not been a huge problem in the current Ethereum network, upgrades to it can only further enhance as the user count grows and malicious minds get more intelligent.
- Sustainability – Since Ethereum 2.0 is based on the Proof-of-Stake (POS) model, energy consumption becomes lesser than what had been the case with previously using Proof-of-Work (POW). This could change skeptics’ take on the Ethereum network.
What Happens After Ethereum 2.0 Rolls Out?
The Merge marks the launch of Ethereum 2.0, after which the other stages will come along. But, initial changes include an increase in Ethereum’s transaction speeds, with higher TPS numbers becoming a reality for the network. Also, Ether holders can actively participate in passive income-generating opportunities via staking that does not need hardcore computing power. With the network’s existent popularity for smart contracts, high market share, and the second most sought-after cryptocurrency ($ETH), Ethereum 2.0 might be another beginning to realize the ideal blockchain dreams.
The Impact of Ethereum 2.0 on Various User Ends
- For the present, Ethereum miners, they would have to migrate to other mining-based blockchains if they wish to utilize their equipment or become validators by staking Ether instead.
- End-users such as crypto and NFT holders will see a change in transaction efficiency and lesser gas charges as the possibility of gas wars gets reduced due to the usage of POS.
- Business owners will also see similar changes, with lesser congestion bringing them rejoicing as users no longer will complain to them for “sloppy transactions.”
As a Venture, What All This Means to Me?
While there are a host of business options available inside the blockchain space, you can even opt for blockchain development should you wish to bring a change. Blockchain App Factory is a trusted firm for developing blockchains and related applications. We are servicing the industry for over 7 years, serving numerous global clients on our way. Many of our client blockchain projects have become massively successful businesses. If you want your venture to make the next Ethereum 2.0-like impact, consider contacting our experts for a start!