The next generation of Ethereum, the Ethereum 2.0, is coming earlier than expected. It was scheduled to launch on January 3, 2021, while now it will go live on December 1 this year, one month earlier. The Ethereum 2.0 will use a different model Proof-of-Stake (PoS), than the traditional Proof-of-Work (PoW).
Basically, in a PoW system, one unit of computational power equates to one unit of mining power. Under PoS, however, one unit of value secures one unit of mining power for the validator. Both systems are designed to incentivize the maintenance of the network while also ensuring that data held on the blockchain cannot be tampered with.
The Ethereum 2.0 will launch only when 16,384 validators validate a stake of a minimum of 32 ether (the cryptocurrency underpinning the network), which is worth circa $12,800 at current market rates. “We have hardened Ethereum 2.0 as much as we can with simulated test environments, formal verifications, and audits. We are incredibly excited to see the community galvanize around the first phase of Eth2, now with real value at stake,” said Joe Lubin, Ethereum co-founder, and CEO at ConsenSys.
One of the significant improvements in Ethereum 2.0 is the transaction speed. It will use “sharding,” which means that only a portion of nodes needs to validate any given transaction, thereby dramatically increasing the network’s throughput. In the past, Ethereum has been criticized for lacking the scalability that would allow it to compete with legacy systems. For context, Visa can process roughly 1,700 transactions per second (TPS), whereas Ethereum 1.0 can only manage 25 TPS. Sharding will increase the transaction speed of Ethereum 2.0 dramatically.