Scalability and accessibility are vital components to the success of Ethereum network-based decentralized applications; however, this does not come without challenges.
To address these problems, developers are working on an upgrade called Ethereum 2.0 or Serenity that involves changing its infrastructure for enhanced speed, efficiency, and scalability.
Scalability
Ethereum, like any blockchain platform, faces unique issues which need to be resolved. These include network congestion, slow transaction speed and excessive gas fees. To address these concerns, the Ethereum team have been developing an update known as ETH 2.0 that aims to enhance scalability and performance on their network.
This upgrade will dramatically alter the way Ethereum works by introducing a feature known as Sharding. Sharding will allow more transactions to be processed without compromising security or consistency and therefore reduce gas costs overall.
At present, Ethereum network can only process 12-25 transactions per second and takes about six minutes to confirm one. This is due to it being overburdened with too many people competing for limited processing power.
Upgrades to Ethereum 2.0 should increase transaction speed and scalability, leading to reduced gas fees for users and making ETH more accessible to a broader audience. It may take some time for DApps to adapt to this upgraded version of Ethereum, as sharding will require updates that require extra code changes and testing – yet scaling capabilities and reduced fees should propel its market even higher.
Security
Ethereum needs improved security measures and transaction processing abilities in order to gain wider adoption and become a competitive payment option against traditional systems, while being capable of handling thousands of transactions per second in order to compete effectively against other cryptocurrency platforms. Additionally, it should provide greater protection for lost or stolen wallets while being more accessible for less tech-savvy users.
With the Ethereum 2.0 Upgrade, developers hope to address these problems and enable it to evolve into a global digital marketplace. Upgrades will make the network faster, more secure, less likely to suffer congestion issues and reduce fees users must pay in order to use its services.
Serenity, the first phase of Ethereum 2.0 Upgrade, will introduce Proof of Stake as its foundational element, thus decreasing hardware requirements while increasing decentralization and security by protecting against 51% attacks which occur when one miner controls more than 50% of mining power in a network.
Sharding, one of the key components of Ethereum 2.0 Upgrade, will divide up its blockchain into smaller pieces to enable simultaneous transactions to be processed more quickly while also decreasing storage requirements of nodes. Unfortunately, however, this task won’t be finished until 2023.
Stake
The Ethereum blockchain hosts a variety of smart contract-based decentralized applications (dApps), used in finance, supply chains, real estate, and governance. But its limited scalability, high transaction fees and slow block times due to its current Proof-of-Work system have limited its growth. Ethereum 2.0 upgrade aims to address these shortcomings through sharding; parallel processing different parts of the blockchain simultaneously in order to process more transactions more quickly; replacing its current Proof-of-Work consensus mechanism with Proof-of-Stake consensus mechanism as part of this change.
Staking is an innovative new way for Ethereum network users to verify transactions and earn rewards, replacing mining’s high amount of computing power requirement for verifying blocks and earning transaction fees. Staking is expected to increase transaction per second rates on Ethereum while simultaneously decreasing fees.
ETH holders looking to join the Ethereum 2.0 network as validators can do so by contributing tokens to a staking pool. Note, however, that running a validator node requires technical expertise and an established internet connection, with some validators likely having an edge over others and leading to centralization of the network. Still staking remains an attractive way of diversifying crypto portfolios with yield-focused investments.
Decentralization
The Ethereum 2.0 upgrade addresses key issues limiting its current functionality. It will make scaling more manageable by increasing transaction per second throughput and decreasing fees while at the same time decentralizing the network by decreasing the number of people needing to run full nodes.
Scalability upgrade will include Ethereum Sharding, which will drastically increase both speed and capacity by breaking up Ethereum into multiple smaller parts. These shards will communicate via cross-shard communication channels; additionally they’ll be capable of executing smart contracts – an increase in security while keeping scalability uncompromised.
Scalability upgrades will also lower hardware requirements for validators. The upgraded Ethereum network will utilize an enhanced Virtual Machine called an eWASM that is more powerful than the original Ethereum Virtual Machine (EVM), enabling validators to work on less costly servers while decreasing power consumption, saving electricity costs and making the system more environmentally-friendly. ETH 2.0 may take years before its full release but according to its creators the project remains on schedule; for now both networks continue operating alongside each other until eventually merging together as one chain.