The highly anticipated upgrade to Ethereum 2.0 is about to begin on the Ethereum blockchain. The hard fork (a process of separation) that converts Ethereum (ETH) from a proof-of-work (PoW) base to a proof-of-stake (PoS) base is known as Ethereum 2.0.
Although the Ethereum Foundation doesn’t actually use the term “Ethereum 2.0”, it is often used in the industry for better understanding.
One of the phases of the update process, called “The merge“, is expected between 10 and 20 September.
Ahead of the final merger, Bellatrix’s update for ETH is scheduled for today, when the value of Ethereum Epoch is expected to rise to 144,896 in the proof-of-stake chain.
The time it takes to mine 30,000 blocks is an era, according to the Ethereum Foundation.
The Bellatrix update is required for the “merge” to work smoothly. This update consolidates the proof-of-stake chain with the current execution level and is the last one before the Paris update, which will take place after “merge” (current proof-of-work).
The Paris update ends the mining of the Ethereum Blockchain and signals the transition from a proof-of-work validation system to a proof-of-stake validation mechanism.
An overview of Ethereum’s updates
The Proof of Work (PoW) method is used to build the Ethereum network just like Bitcoin. This suggests that creating Ethereum (ETH) coins requires energy-intensive mining.
However, with the launch of Ethereum 2.0 in 2020, several steps have been taken to move to a proof-of-stake (PoS) paradigm. The goal is to increase the speed, efficiency, and scalability of the Ethereum network so that more transactions can be processed simultaneously.
From the current 20 transactions per second, the throughput will increase to 1000-1500 transactions per second. If an external solution (roll-up) is used, this figure can approach 100,000 transactions per second.
In addition, this change significantly reduces energy consumption and eliminates complaints that blockchain is bad for the environment. Since the start of the Beacon Chain on December 1, 2020, Ethereum 2.0 has been gradually introduced in several stages.
Staking, an essential part of PoS conversion, will be added to the Ethereum chain with the Beacon Chain upgrade. As the name suggests, Beacon Chain is an independent blockchain from the Ethereum mainnet.
What follows The Merge?
Vitalik Buterin, the creator of Ethereum, awarded the project a development progress score of 50% earlier this year. Along with this assessment, he listed the merger, wave, berm and other phases that Ethereum must go through to reach 100%.
The Bellatrix update will unite the Beacon Chain with the Ethereum mainnet and completely change the consensus algorithm from PoW to PoS.
The next stage of the increase is the introduction of the zk rollups of the level 2 scale solution. A method called rollup uses a side chain of Ethereum to consolidate and execute multiple transactions at the same time.
Processing the data elsewhere reduces the load on the core network. To increase the number of authentication participants in the chain, the storage capacity is optimized and the size of the nodes is reduced.
Afterwards, the purge eliminates the extraneous historical data and in the splurge phase we work to simplify its use. The two most important processes here are merge and augmentation.
According to Ethereum founder Vitalik Buterin, after the merger and scaling up, Ethereum will be almost 80% complete when the split is completed.
Sharding
Sharding is a distributed database solution that accelerates network and database transactions. The trading ledger supports multiple users joining the blockchain at the same time if sharding is used. Ethereum 2.0 plans to include 64 shard chains to speed up processing.
Serenity, the nickname given to Ethereum’s completeness, could be reached after 2023, according to industry analysts.
The future of Ethereum
Ethereum aims to become the de facto blockchain platform for all decentralized applications. However, it also experienced some growing pains. Transaction speed has always been one of the biggest issues.
If Ethereum is the network for all decentralized applications, it must be able to accommodate many more transactions simultaneously.
Currently, Ethereum can only process 15 transactions per second, while Visa can process 50,000. Can Ethereum 2.0 solve the problems of poor performance and high gas prices for users?
Ethereum is currently in a difficult situation. Claiming to be “Ethereum killers”, other layer 1 blockchains such as Cardano, Tezos, Polkadot and Aptos are increasing their market share. They all decided to increase network speed while maintaining security. Layer 1 blockchains are not unique. Layer 2 scaling solutions are emerging on the Ethereum blockchain that aim to reduce gas costs and transaction speeds.
By processing and managing off-chain transactions before they are completed on, for example, the main Ethereum blockchain, Polygon and Arbitrum claim to complement Ethereum. In the future, however, they also want to upgrade to Layer 1.
Will this upgrade maintain Ethereum’s top spot among the many blockchains available today? Upgrading Ethereum should have a number of results. One of the expected results is that a drop in Ethereum supply would increase the value of cryptocurrencies.
According to Darren Langley, managing director of staking service Rocket Pool, quoted in The Defiant, the merger could ease fears that rising interest rates and inflation could send cryptocurrencies and stocks into a prolonged bear market.
