Ethereum has consistently followed a roadmap for continuous further development towards a consensus protocol to prove the use, and in 2020 the foundations for Ethereum 2.0 were laid. The blockchain for smart contracts has firmly established itself as the platform supported by the world’s second most important cryptocurrency, Ether (ETH), and has become an essential resource for developers to create blockchain-based applications and tools.
The emergence of the decentralized financial sector is largely based on the Ethereum blockchain and gives more credibility to the decentralized functionality of the platform. However, the increase in the use of the blockchain comes at a high price as network speed and transaction costs are directly impacted as more users and platforms are added to the blockchain. This is a driving force behind the already ongoing transition to Eth2.
The ongoing move to Eth2 in 2020 seems very positive and the project is very excited as a new year begins. So what are the main hopes for the next step in the evolution of Ethereum in 2021?
Eth2 in a nutshell
Ethereum 2.0 is the next step on the blockchain’s path from a proof-of-work consensus protocol to a proof-of-stake algorithm. This is an essential part of developing Ethereum to make the blockchain more scalable, secure, and sustainable. The goal is to support thousands of transactions per second to make applications faster and cheaper to use.
Security is a top concern and a step in demonstrating its use must ensure that the protocol is more secure against all types of attack. Last but not least, moving away from PoW is a major factor in limiting the environmental impact of the Ethereum network. In its current state, the network requires a lot of computing power and electricity in order to remain sustainable.
The first phase is the Beacon Chain, which is responsible for introducing PoS into the protocol and which started on December 1, 2020. Eth2 users can now use the ETH and become a validator of the network. To be a full validator, users need to deploy 32 ETH and see these users process transactions and create new blocks in the chain. This is seen as the future of securing the Ethereum network and will eventually replace the current power-saving PoW consensus mechanism.
With the Beacon Chain live, the next step is to roll out shard chains, which are slated to happen sometime this year. Without going into the details, sharding can be used to split a database in order to distribute the workload. Ethereum will use shard chains to reduce congestion on the network and increase transaction speed. This also significantly reduces the hardware requirements for running a node. It is planned to create 64 splitter chains.
The beacon chain will eventually assign certain validation chains to different validators, thereby distributing the work required to validate the Ethereum blockchain. The first iteration of these shard chains does not process transactions or smart contracts, but instead stores and manages data on the network.
The long-term goal is to combine shards with rollups, which essentially bundle transactions outside the chain in order to then send them back to the mainnet. This should greatly improve the transaction processing ability of the Ethereum network.
A vote of confidence
Cointelegraph has reached out to a few people who are at the forefront of the ongoing development of Ethereum. Ben Edgington, senior product owner of Teku – an Eth2 client created by ConsenSys for corporate and institutional companies – was directly involved in the research and development of Eth2.
A major theme for the ongoing move to Eth2 was the amount of ETH that is in the Beacon Chain contract. Edgington told Cointelegraph that the community’s willingness to get involved has been very positive for developers:
“The amount already invested by ETH is an immense vote of confidence, not only in the beacon chain, but also in the future of Ethereum. I am impressed with how much has come in so quickly and very encouraged by the commitment of the Ethereum community to what we have built and will continue to build. “
Edgington added that launching the Beacon Chain was arguably the hardest part of the Eth2 project and was a major milestone that has increased confidence in the upcoming stages of Ethereum’s journey.
Viktor Bunin, protocol specialist at blockchain infrastructure provider Bison Trails, told Cointelegraph that ETH’s continued involvement shows that the community has a lot of support for the protocol going forward, adding:
“I was surprised that the inflows continued to be so large and I believe the line for Eth2 will not be empty for all of 2021, which means waiting for a validator to join the network because there are so many there are attempts to participate at the same time. “
Lubin and Buterin also have high hopes
In early December 2020, ConsenSys founder Joseph Lubin suggested that the transition to the next phase of Eth2 could be faster than expected because the beacon chain was up and running. “Those familiar with the ecosystem are very optimistic about how quickly things could develop as the really complicated work was done at the start of Phase 0,” Lubin said during the “Ethereum in the company – Asia-Pacific 2020” conference.
Lubin added that the Ethereum Foundation expects shards to dramatically improve data availability on the Ethereum blockchain when deployed. He went so far as to say that Eth2 could include Eth1 “in the not too distant future”.
The co-founder of Ethereum, Vitalik Buterin, gave some insights into the further development of the ecosystem in an online meeting that Ethereum Buenos Aires hosted on December 29, 2020 on YouTube. He highlighted the key goals for the Ethereum ecosystem over the next 12 months. One of the main concerns is the current cost of transactions on the blockchain, which, according to Buterin, is still a sticking point: “We have to work very hard to make sure there is more space for transactions so that we don’t have this dynamic that everyone is in for a very small space so that very few transactions can come in. “
Buterin also said that Ethereum’s goal is to be able to support hundreds of millions of users over the next few years. Currently, however, the blockchain can only support 15 to 45 transactions per second.
Buterin then went through a mid-term scalability roadmap and highlighted the potential of rollups that could allow the network to process 1,000 to 4,000 transactions per second. When Eth2 sharding and rollups are deployed together, Buterin has highlighted the potential for 25,000 to 100,000 transactions per second.
The co-founder of Ethereum concluded that he hopes to finalize the current development roadmap of the Eth1 (PoW) and Eth2 (PoS) chains by the end of 2021 and to run test networks for the full integration of the two chains, along with the sharding Function, he added: “Potentially, the light client support for the proof-of-stake chain could be used before the merger to provide better light-client support for the proof-of-work chain.”
Ethereum developers trust the process
A common theme that emerged during Ethereum’s ongoing development was, according to those involved, the focus on quality. Although schedules have been set, developers have been more concerned with creating and implementing upgrades that are not rushed.
Bunin told Cointelegraph that various Ethereum users, developers, and companies that he has had contact with over the past few years have been unhappy about how long it took to start the Beacon Chain, but that they heard from the news of the launch were enthusiastic:
“They didn’t use abbreviations for Phase 0 design and weren’t afraid to return to the drawing board after failed attempts or after discovering new tweaks. You will and should continue to optimize for the best design, not execution speed. “
As Buterin mentioned in December 2020, the 2021 roadmap includes development goals for Eth1 and Eth2. The latter includes work on shard chains that promise to improve the scalability of the protocol. Edgington said he was hoping to have broken glass chains on the market by the end of the year, but that will depend on the amount of work to be done in 2021:
“The design for sharding is well advanced and I expect to make excellent progress on implementation this year. Personally, I hope that sliver chains will hit the market in 2021, but we don’t have a target date yet. In addition, we have brought the merger of Eth1 and Eth2 forward in the roadmap, so that we will work on it in parallel with the sharding. “
There’s no denying the pressures to make these performance-enhancing upgrades in 2021. DeFi was an important topic in 2020 and put a bit of a strain on the Ethereum blockchain. Edgington, however, reiterated the view that the development community would not respond to this type of pressure in the New Year: “There was always a sense of urgency regardless of DeFi! […] The tension between acting right and acting quickly is always there, but I believe we are in a reasonable place. “
Bunin also believes shard chain development doesn’t necessarily need to be accelerated, saying that developers mindset is optimized for quality because they are “building the financial infrastructure of the next century.” He added, “I expect broken glass chains to hit the market by the end of 2021, but I’m also comfortable if they are delayed.”