Before Web 3.0 became a buzzword in the crypto space, Ethereum Upgrades (formerly ETH2.0) was the rave (and still is). Ethereum, the world’s second-largest cryptocurrency by market cap has been in the news consistently for its multitude of upgrades. The platform, famous for its smart contracts, intends to switch from a proof-of-work (PoW) consensus to a proof-of-stake (PoS).
The transition will allow validators in the ETH blockchain to stake ETH to validate transactions. A break from the proof-of-work mechanism where validation is done via solving complex puzzles.
The PoW mechanism is believed to be one of the main reasons for congestion and high gas fees on the Ethereum network.
The new upgrades are expected to make the Ethereum blockchain faster, more energy-efficient and less expensive.
What are the Ethereum Upgrades?
A series of upgrades to the Ethereum blockchain infrastructure are in progress, some are completed, while others have yet to be deployed. The upgrades aim to improve its scalability, security and sustainability. The upgrades are expected to ease the congestion on Ethereum which is notorious for high gas fees and delayed transactions.
The Ethereum upgrades may be what saves Ethereum from other smart-contract compatible blockchains like Solana and Avalanche. Both blockchains are proof-of-stake and have eaten into Ethereum’s share of the Defi market.
Currently, Ethereum only processes about 15 to 20 transactions per second (TPS). In contrast, Solana, Ethereum’s main competition, processes 50,000 transactions per second. Each upgrade is expected to increase Ethereum’s ability to handle more transactions. After the sharding upgrade, Ethereum is anticipated to have a transaction throughput of 100,000+ TPS.
The upgrades are being deployed in three phases. The first is ‘The Beacon Chain’ which will switch Ethereum to PoS. This upgrade takes place on a separate blockchain and it already began in late 2020. The second phase is ‘The Merge’ which will lead to the merger of the Beacon chain to the Ethereum main net. The final phase is ‘The Shard chains’ which will scale transactions faster by spreading them out on 64 chains.
What Changes do the Upgrades Bring to Ethereum?
The Ethereum upgrades are expected to bring several significant changes to the Ethereum blockchain. Some of them are:
Energy Efficiency
Proof-of-work blockchains consume large amounts of energy and Ethereum 1.0 is no exception. Ethereum’s current energy use stands at 105.6 terawatt-hours. For comparison, Australia’s energy use for 2021 was 188 terawatt-hours. A switch to PoS is estimated to cut down Ethereum’s energy use by 99.95%.
Staking
When the upgrades are fully implemented, Ethereum will become a purely PoS chain bringing staking and staking rewards to Ethereum holders. Users with up to 32 ETH can lock the ETH in a governance contact, validate transactions, and be rewarded. Staking went live with the launch of the beacon chain in December 2020.
Scalability
The sharding upgrade is the final phase of the transition and will see Ethereum split its network into different chains (64). These chains will enable layer-2 solutions like Polygon and Arbitrum to provide low transaction fees via Ethereum. The shard chain is the phase expected to increase ETH’s scalability raising its throughput to 100,000 TPS.
When Will the Final Upgrades be Launched?
Ethereum’s upgrades were supposed to come online in 2022 but there have been delays with the merging of the beacon chain to the mainnet. The updated timeline on the Ethereum foundation’s website projects a 2023 launch date. The 2023 launch date will depend on how soon the beacon chain can be merged to the Eth mainnet.
Source: https://www.cryptovantage.com/news/will-ethereum-2-0-actually-launch-in-2022/
