Ethereum 2.0
Ethereum 2.0
What is Ethereum?
Ethereum 2.0 is an update to the Ethereum blockchain platform which launched on July 30, 2015.[1][14] The platform intends to redesign and improve decentralization, resilience, security, simplicityss, and longevity.[4] Within the cryptocurrency world, this is the first time a network the size of Ethereum's will be attempting to transition all its users and assets to a new decentralized network, while simultaneously trying to maintain its current network active and functioning.[2][28]
On January 6, 2021, the amount staked on Ethereum 2.0 reached 2.28 million ETH valued at over $2.5.[35]
History
Ethereum 2.0 Explained By Vitalik Buterin 2020
Ethereum 2.0 is the continuation and upgrade of the current active platform, Ethereum.
It is being developed by the Ethereum team, who is a non-profit organization that consists of less than 100 employees.[5] Work on the project first began in 2015 when Ethereum was launched.
Since then, the organization's core team has been working towards a second version.
Despite various smaller upgrades that have helped improve its usability and scalability, Eth2.0 is set to be its most ambitious upgrade.[6]
Ethereum 2.0's initial public testnet has had some confusion with regard to its official launch.
Ethereum Foundation researcher Justin Drake, in a Reddit Ask-Me-Anything post, believed its launch would be around January 3, 2021. He stated in the post,
With Thanksgiving on November 26 and the December holidays I’d say the latest practical opportunity for genesis in 2020 is mid-November, 4 months from now.
As such, I’m now inclined to say that the earliest practical date for genesis is something like January 3, 2021 (Bitcoin’s 12th anniversary).[7]
The platform's co-founder, Vitalik Buterin, said its first stage, known as phase 0, should not be delayed. In a direct reply to Drake's comment, he stated,
...I personally quite disagree with this and I would favor launching phase 0 significantly before that date regardless of level of readiness... [8]
Despite some of the aforementioned contradictions, the organization collective confirmed that the Medalla testnet of Ethereum 2.0 would officially launch August 4, 2020.
In a statement, Danny Ryan posted to the platforms discussion board, stating,
After discussions with client teams, the next multi-client testnet (mainnet config including min validator numbers) will have a min genesis time of Aug 4 (likely 1 or 2 pm UTC).
From there, the platform's testnet will last for at least three months to assess and assure stability, which would be done before the platforms official launch.[12] In addition to the testnet, Ethereum has released a validator launchpad, which allows users to participate in the platform's new proof-of-stake (PoS) feature.[13]
New Features
Experts Discuss ETHEREUM 2.0 - Andreas Antonopoulos, Charlie Lee, CZ & Charles Hoskinson
Ethereum 2.0 will introduce two overhauls on previous Ethereum technologies.[15] The first is the introduction of proof of stake.
It is arguably the most prominent change because it changes the current 'crypto-economic incentive structure' that validates the blockchain.
It would replace Ethereum's current architecture, Proof-of-Work (PoW), which is famously used by Bitcoin, Litecoin, Ethereum, and many others. The second, which is related to PoW's replacement, are shard chains, which would dramatically accelerate the 'throughput of the Ethereum blockchain.'[16]
The drawbacks of the PoW system lie within the architecture's scalability and accessibility.
One of the key issues with the system's scalability is the limited amount of data that can be recorded into each block, which is mined sequentially.
As a result, if the number of pending transactions exceeds the amount a block can fit, the transactions that were not able to fit, will have to wait for the next block.
PoW also falls short when it comes to accessibility.
One of its main drawbacks is the barriers to entry when one wants to become a cryptocurrency miner. In order for one to become a miner, they must purchase and set up special hardware, that requires substantial amounts of electricity, to be able to mine the desired cryptocurrency and earn a substantial amount.[16] The solution to the scalability and accessibility the PoW system is not able to provide lies within the implementation of the PoS system, as it will be able to process transactions and host smart contracts and decentralized applications (DApp's) at a faster pace. Additionally, the addition of shard chains would assist in the speed at which transactions are processed. [17]
Release Plan
Ethereum 2.0 is expected to release in phases.
Phase 0 would be the first phase.
During this period the "Beacon Chain", a registry that stores and manages the registry's validators, will add the PoS system.
Despite the addition, the PoW system will remain online alongside the new system.[15] Phase 0 is the only current active part of the plan, and it has been running on a variety of testnets since April 2020.[12]
Phase 1 would follow and would be expected to roll out around 2021.
This phase would focus on the addition of shard chains, which assist within the scalability of the system, making it easier to build 'scalable' applications on Ethereum 2.0.
Phase 2 remains fairly unknown, with regards to what it would add to the system.
It is scheduled to launch in 2021 or 2022.[15]
Medalla Testnet
Ethereum 2.0's Medalla testnet went live in August 2020.
Medalla was one of many Eth 2.0 testnets over 2019 and 2020.
Unlike the other testnets, however, Medalla was public – meaning network validators were not centrally coordinated by developer teams.
Over 20,000 validators joined the network with some 650,000 ETH staked, according to the Beaconcha.in block explorer.[18]
Medalla was joined by five clients including Prysmatic Labs' Prysm, ChainSafe's Lodestar, PegaSys' Teku, Status' Nimbus and Sigma Prime's Lighthouse.[18]
Spadina Testnet
The latest in a series of Ethereum 2.0 testnets, called Spadina, launched on September 29, 2020.
Spadina was proposed as a short-lived "dress rehearsal" for the mainnet launch process, signaling that Ethereum 2.0 Phase 0 is getting closer.
The network launched on September 29 with 2,856 active validators and 91,382 ETH staked and was intended to last for only 72 hours.
No major issues were found in the deposit process and the clients handled blocks successfully.[19][20]
Like with the initial Medalla testnet launch, participation rates were below expectations.
The first few rounds of validation saw below 34% of the stake joining in the consensus process, while the target percentage was 80%.
Such low participation rates suggest that many community members who signed up to be validators failed to bring their clients online in time for launch.
Since testnet Ether has no value, stakers don’t care if their capital gets slashed while they are offline.
A future mainnet launch with real ETH is likely to involve more serious and dedicated participants, who would be penalized for avoiding their obligations.[19]
The coordinator of Ethereum 2.0, Danny Ryan announced the launch of a second "dress rehearsal".
Therefore, in early October the team will deploy the Zinken testnet.
However, for this testnet Ryan will focus on a "clean client release process" and better user experience.[20]
Zinken Testnet
Zinken, a final Ethereum 2.0 “dress rehearsal” launched on October 12, 2020, at 12:00 UTC.
Danny Ryan, a core Ethereum developer, said Spadina testnet suffered long waits to block finality and low participation from Ethereum 2.0 clients, or parties that run nodes to validate transactions. He said:
"Even though we expect moderately low participation on a short-lived non-incentivized testnet, small errors in the client release process great[ly] exacerbated this problem, resulting in ~1/3 participation in the first few epochs.
In response to these issues, we'll be hosting -at least- one more dress rehearsal -- Zinken -- prior to genesis."[22]
Ryan added the dress rehearsal’s load was tilted unfavorably toward Prysm, which took on the lion's share of the testnet’s users:
Finally, it appears that Zinken was heavily weighted toward a single client -- Prysm -- which had a critical peering issue in the pre-Spadina release.
A better distributed multi-client network from the start could save us from headaches when a single client has a failure.[23]
Deposit Contract Launch
On November 4, 2020, Ethereum 2.0’s deposit contract went live.
Released at 15:00 UTC, according to developer Afri Schoedon, the deposit contract is the first physical implementation of Eth 2.0 for everyday users.
The deposit contract acts as a bridge between the forthcoming Proof-of-stake (PoS) blockchain and the current Proof-of-work (PoW) mainchain, valued at some $40 billion by market capitalization.[24][29]
On a practical level, Ethereum stakers can now begin depositing the 32 ether (ETH) required to stake on Eth 2.0.
Once 16,384 validators have deposited funds equivalent to a total of 524,288 ETH into the contract, the Beacon chain – the spine of Ethereum 2.0’s multiple blockchain design – will start the “genesis” event of Ethereum 2.0.
Stakers will begin earning inflation rewards after the genesis event by placing their ether as collateral on Eth 2.0.[24] The required sum must be collected at least seven days before the expected launch date of Dec. 1.
If it is not, the launch is delayed to seven days after the threshold is reached.[27]
After the launch of the deposit contract, Vitalik Buterin sent his first ether for staking. Buterin's "VB2" address sent 100 transactions for 32 ether each, totaling 3,200 units of the cryptocurrency, as reported by TrustedNodes. The amount was worth around $1.4 million as of November 6. As of November 9, the deposit contract holds 49,537 ether, worth some $22 million.[25][26]
Beacon Chain
On December 1, 2020, Ethereum 2.0 went live with the launch of Beacon Chain, the first major part of the Ethereum 2.0 upgrade known also as Phase 0.
Danny Ryan, the core researcher at the Ethereum Foundation, said on the Ethereum 2.0 livestream:
“We thought we were going to launch in December last year.
It’s been a journey.”[30]
The first eligible block created by a validator was slot 1.
The person who validated it signed it, "Mr F was here."
Participants on the livestream speculated as to what this could mean.
The fourth block was signed, "Welcome to the New Beginning."
Hudson Jameson later clarified that it wasn't an Arrested Development reference, but that it has two meanings. "For the record: Mr. F is a reference to Queen and Vitalik's autograph to them," he tweeted.[30][32]
On December 4, four days after the protocol successfully launched its Beacon Chain, 1 million ETH was locked in smart contracts of Ethereum 2.0, as per on-chain explorer service Etherscan. As of December 6, the amount is worth almost $700 million and would reward stakers in the future when other phases are launched and the staked amounts open up for withdrawals.The amount of staked funds consists of a total of 3,234 depositors, who staked a minimum of 32 ETH each as per Dune Analytics.[33][26][35]
As of January 5, 2021, the Ethereum 2.0 staking protocol held over 2.2 million ETH, data from on-chain analytics site Dune Analytics showed. The amount was worth over $2.3 billion at Ethereum’s current market price of $1,049. The network now ranks fourth among the biggest cryptocurrency staking networks, according to StakingRewards. Leading the pack are Polkadot, Cardano, and Synthetix.[36][37] The Ethereum 2.0 deposit contract initially required 524,000 ETH to launch, but as per January 5 data, it has been oversubscribed by over 428%. Data shows that 4,483 unique validators deposited to the network, or an average of 500 ETH per depositor. Of that, some known depositors are the crypto lending platform Celsius Network (25,000 ETH) and Ethereum creator Vitalik Buterin (3,200 ETH).[36]
Upgrade notice: ETH network latest upgrade, Berlin will be rolled out at block #12,244,000 (est. April 14th, 2021).
Miners and node operators will need to update their clients to the latest version.
If you are holding ETH in your own wallet or exchange, there is nothing that you need to do for this upgrade.[40]