The Ethereum 2.0 Upgrade: A Race To Scalability

Ethereum 2.0

With over 3,500 decentralized applications, Ethereum has established itself as the top choice for blockchain developers. However, a slew of competitors (new and old) are looking to capitalize on Ethereum’s growing pains– projects like PolkadotCardano, and Solana are eager to succeed where Ethereum has performed poorly. 

If Ethereum wants to stay competitive, the Ethereum 2.0 Upgrade must first address its all-time high gas fees (~$5.75/transaction) and its relatively slow transaction speeds (10-15 transactions/second).

These two factors make it 1,000,000x more expensive to develop on the Ethereum blockchain than a centralized network.

Ethereum Scalability Issues

From Ethereum.org

Vitalik Buterin, the co-founder of Ethereum, and his team have been working to address these concerns, but have yet to make sizable changes to the current blockchain known as the mainnet. The new Ethereum 2.0 Upgrade, however, may be exactly what the Ethereum project needs. 

This upgrade will address the current scalability, security, storage, and sustainability needs of the network. The three stages are:

  1. The Beacon Chain
  2. The Merge
  3. The Shard Chains

Beacon Chain

The first stage of the Ethereum 2.0 Upgrade was already released in December 2020. The Beacon Chain will take over the role as the main hub from the Ethereum mainnet and handle data storage, on-chain security, and block validation.

It will also transition Ethereum over from a Proof-of-Work model to Proof-of-Stake.

Proof-of-Work, the current model, involves validators mining blocks and securing transactions that reward them in ETH. This process can have a negative impact on the environment and push out potential validators that don’t have the computing power to handle solving complex problems.

The Beacon Chain, according to the Ethereum team, will help usher in a more scalable solution in the long term with this Proof-of-Stake model that will be discussed in the next phase. 

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William K. 1 week ago Member's comment

The whole benefit of the funny money scheme is still a bit uncertain although it might be reasonable. For certain the "mining" of coins by means of computer operation is not a valid mechanism for producing actual value, (aka wealth). Proof of stake makes more sense, at least in abstract.

But certainly there is some serious potential for discord with the presence of incompatible currencies.