After years of research, phase 0 of ETH 2.0 is less than two months away from the promised launch date, and there are farreaching inferences that change the way Ethereum, as a network, works. In order to understand how Ethereum is going to work in the future, we need to understand what is changing and what effects the said change would impose.
In addition to mining through Proof of Work, Ethereum will soon have a Proof of Stake layer live on the blockchain by January 2020. Staking is an easy way for people with a vested interest in the ecosystem to contribute to network security, whilst simultaneously earning a reward. The reward schedule proposed by co-founder Vitalik Buterin is the one that is most likely to be implemented as staking takes off.
The shift from Proof of Work to Proof of Stake is an ideological simulation that is been in the works for years. Energy waste created by Proof of Work has been seen as a major issue from across the ecosystem. Additionally, using external mining rigs ensures miners don’t need to have real “skin in the game”. By delegating network security to those who hold ETH and have a financial incentive for properly securing the network, the economic incentives lead to a more robust security architecture – at least theoretically.
Many PoW proponents are anti-PoS and that is understandable. PoS is an unproven concept as of yet, a DPoS (Delegated Proof of Stake) used by TRON and EOS make networks inherently centralized by limiting the number of participants in the network.
Moving on, ETH 2.0 promises a new paradigm of on-chain scalability. According to Vitalik Buterin, depending on the execution environment a user utilizes, throughput will range from 5,000 – 500,000 transactions per second – a massive increase from the current 13-37 transactions per second limit.
Scalability has been one of the biggest obstacles to distributed ledgers. Inherently, blockchains created a transparent environment, but they aren’t efficient when it comes to transmitting a higher volume of data. With scalability improvement, UX on Ethereum is expected to become much better, albeit at a cost.
The size of the Ethereum ledger is growing at a rapid pace. At this point, it takes one or two months to fully sync an archival node. This discourages people from running a full node, although there are two viable options: fast sync and pruned nodes. Fast sync, which is the default on the Geth client, downloads all the blocks and with their verified proof of work, rather than simply downloading each and every transaction since the genesis block. A pruned node only goes as far back as you choose. For example, you can prune your node from Jan 1, 2019, and it will only sync from that date onwards. With a pruned node, you cannot confirm the authenticity of previous blocks yourself and rely on the verification performed by other full nodes.
All in all, ETH 2.0 is a major innovation to the Ethereum blockchain and help propel decentralized finance and widespread smart contract usage. Hopefully, it ships as proposed on January 3, 2020.