After years of waiting, the next phase of development of the Ethereum network is about to begin.
On Sept. 16, Ethereum Foundation lead developer Danny Ryan published an official proposal for the merger of Ethereum Improvement Proposal (EIP) number 2982 into the main Ethereum code branch on GitHub.
Ethereum 2.0 will move the No. 2 cryptocurrency’s blockchain from a Bitcoin-style, energy-hungry, proof-of-work (PoW) consensus mechanism to a faster, more energy efficient proof-of-stake (PoS), in which blocks are confirmed by validators who essentially post a bond to ensure good behavior.
Calling it a “major upgrade of Ethereum’s consensus mechanism,” Ryan explained that this EIP is the launch of “Phase 0 of Serenity (eth2).” The official website dedicated to eth2 explains:
“Eth2 will reduce energy consumption, allow the network to process more transactions, and increase security. Technically speaking, Ethereum will become a proof-of-stake blockchain and introduce shard chains. This is a huge change to how Ethereum works and it should bring equally huge benefits.”
Ethereum is feeling the heat
Ethereum has been the platform of choice for the development of DApps for some years, but the network’s scalability limitations resulted in high fees—gas prices—and long transaction confirmation times for its users. All of this resulted in many smart contract developers choosing to base their projects on competing blockchains or resort to sidechains or second-layer scalability solutions.
Algorand, for example, is one company trying to get hold of a portion of Ethereum’s market share by trying to attract decentralized finance (DeFi) developers. The platform recently launched cutting-edge smart contract capabilities allowing the deployment of solutions “that can scale to billions of users and tens of millions of daily transactions.”
The upcoming changes
EIP-2982 will move Ethereum to the first part—Phase 0—of its next development stage, known as Serenity. This stage will establish a new Ethereum blockchain—called beacon chain—which will keep all of the network’s shards (think of them as smaller blockchains working together) in sync by making sure every one of them has the most up-to-date data.
During Phase 0, the beacon chain will be a single PoS blockchain as it won’t have any shards to manage until the deployment of Phase 1, which is scheduled for 2021. Phase 1 will still be rather limited as it won’t support accounts or smart contracts until Phase 1.5 rolls out later during the same year.
Until Phase 1.5, the Ethereum used on mainnet will continue as a Proof-of-Work blockchain, but the transition when reaching this phase should be seamless for both users and decentralized applications (DApps).
Phase 2—expected to be deployed in 2021 or later—is when shards finally become fully functional blockchains compatible with smart contracts that are able to freely communicate with each other. Developers should also be able to deploy shards customized for their own purposes.