The next generation of the Ethereum blockchain has been in the works for years, but is finally about to come to fruition.
As per an Ethereum Foundation blog post, Ethereum 2.0 will now go live on December 1, instead of January 3 2021 as originally planned.
The upgrade will see the blockchain transition from a Proof-of-Work (PoW) model to Proof-of-Stake (PoS), whereby participants tie their cryptocurrency to the network as collateral.
For the launch of Ethereum 2.0 to take effect, 16,384 validators will need to stake a minimum of 32 ether (the cryptocurrency underpinning the network), which is worth circa $12,800 at current market rates.
Meeting this figure will trigger the launch of the Beacon Chain – infrastructure that will facilitate the switch – in what is being described as the Ethereum 2.0 genesis event.
“We’ve hardened Ethereum 2.0 as much as we can with simulated test environments, formal verifications and audits,” said Joe Lubin, Ethereum co-founder and CEO at ConsenSys.
“We are incredibly excited to see the community galvanize around the first phase of Eth2, now with real value at stake.”
Ethereum 2.0 will roll out in phases over the coming months, but the launch of the Beacon chain represents the all-important first step.
The most significant change is that the consensus mechanism underpinning the Ethereum blockchain will transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS), which is generally considered to be a more effective and energy-efficient means of maintaining the network.
A basic way to describe the difference is that, in a PoW system, one unit of computational power equates to one unit of mining power. Under PoS, however, one unit of value secures one unit of mining power for the validator.
Both systems are designed to incentivize the maintenance of the network, while also ensuring that data held on the blockchain cannot be tampered with.
The second main improvement is the introduction of sharding to the Ethereum network (although this will occur as part of a later phase), which means that only a portion of nodes need validate any given transaction, thereby increasing the network’s throughput dramatically.
In the past, Ethereum has been criticised for lacking the scalability that would allow it to compete with legacy systems. For context, Visa is thought to process roughly 1,700 transactions per second (TPS), whereas Ethereum 1.0 can only manage a meagre 25 TPS.
By effectively dividing the network into lanes, however, the maximum number of TPS processed by the Ethereum 2.0 can be increased by magnitudes.