Ethereum developers have spent years devising ways to alleviate network congestion and fees, leading them to create updates known as Ethereum 2.0 and Serenity.
These upgrades will make Ethereum more scalable, accessible, and secure by implementing sharding, layer 2 rollups, and more – enabling it to process 100,000 transactions per second!
Beacon Chain is the Ethereum network’s new consensus layer, designed to replace Proof-of-Work. When integrated into its mainnet, Beacon will make the network more secure and scalable while decreasing carbon emissions and saving on electricity usage costs.
Proof-of-Work is currently used by Ethereum to reach consensus, which involves computers solving complex math problems to produce blocks on its blockchain. Unfortunately, this requires significant amounts of energy consumption. Proof-of-Stake provides an efficient alternative that relies on validators voting instead of mining to produce blocks; Beacon Chain manages this process and will eventually merge into the mainnet to convert Ethereum into a Proof-of-Stake blockchain.
To become a validator, you must deposit a specific amount of ETH into a smart contract on the Ethereum mainnet. When your deposit has been confirmed by Beacon contract’s Merkle hash system, you will be ready to participate in validation processes and earn rewards!
Beacon Chain will primarily focus on managing its validators. It does this by designating one validator as block proposer in each shard at each epoch; organizing committees of validators to vote on proposed blocks; applying consensus rules; rewarding and penalizing validators accordingly, and serving as an anchor point on which shards register their states to facilitate cross-shard transactions.
Prior to now, “Ethereum 2.0” implied a new cryptocurrency or hard fork; now however, this term simply refers to upgrades planned in three stages including Beacon Chain, Merge and Shard chains.
Beacon Chain, the initial phase of this upgrade, has already been released and implemented. It uses a proof-of-stake consensus mechanism on Ethereum blockchain that involves staking ETH to validate transactions and create blocks more energy-efficient than mining complex math problems with PoW mining methods.
Once Beacon Chain is integrated with Ethereum mainnet, it will become a fully-functioning proof-of-stake Ethereum network with 100 times more transactions per second and faster smart contract execution times.
Sharding will address any remaining limitations to Ethereum scalability. Shards provide a solution that balances security and decentralization while scaling, by breaking up the blockchain into multiple parts that run concurrently and increase throughput while decreasing storage requirements; they’ll also enable cross-shard transactions for faster transactions.
Ethereum’s rapid growth and use has resulted in its network becoming congested, sending transaction fees skyrocketing. To address these problems, its community is developing innovative scaling solutions as part of an update package known as Ethereum 2.0 – with Beacon Chain already released; Merge scheduled for late 2022; and Shard chains being added by 2023.
This upgrade will enhance security while making dApp interactions faster, as well as enable businesses to build high-performance applications on Ethereum’s platform. In addition, reduced gas costs and transaction fees should result in greater usage rates.
Some analysts expect the increased scalability and lower transaction fees to create greater demand for Ethereum (ETH), possibly pushing its price even higher.
One of the primary features of Ethereum 2.0 is Sharding, which will enable it to process 100,000 transactions per second compared to traditional payment systems like Visa that can only process approximately 1,667 per second. Sharding may make Ethereum an alternative banking system and together with Layer 2 Rollups will increase scalability exponentially.