The Ethereum upgrade from version 1.0 to 2.0 is projected to begin in early 2020. The upgrade is dubbed “Serenity” and will be developed in multiple phases.
The main goal of Serenity is to be able to transition the Ethereum blockchain from a Proof of Work (PoW) system to Proof of stake (PoS).
Ethereum developers believe that a PoS consensus mechanism will allow the network to scale while remaining decentralized and secure.
Phase 0 of Serenity will introduce a dual consensus mechanism. The Beacon Chain will be the new PoS system and will run parallel to the original PoW system of Ethereum, at least for a while.
Beacon Chain will allow staking through the ETH2 currency, which is a new token that will be used to validate the PoS chain. ETH2 can be generated by burning your original ETH and converting it.
Once you have ETH2, there’s no way to convert it back to ETH or withdraw it in Phase 0. You can also be rewarded ETH2 for validating the network.
The minimum requirement for being a validator is staking 32 ETH2.
Sharding is the process of partitioning the Ethereum blockchain into multiple parts called “shards”. This allows the network to run orders of magnitude faster, but is also the most complex of Ethereum’s scaling solutions.
Sharding will be rolled out in Phase 1, but will be more of a “test run” and not the promised scaling solution just yet. The beacon chain will support 1,024 shard chains, each validated by 128 nodes.
Phase 2 is when the functionality of Serenity comes together. A new virtual machine called eWASM will be introduced, allowing shard chains to become fully-functional transaction chains that can scale the Ethereum blockchain drastically. This is the time when users can witness just how fast and cheap a PoS blockchain can be. Furthermore, smart contracts will also be reintroduced.
This milestone is projected to happen sometime in 2021.
At this point, the PoW blockchain remains active while the Beacon chain (PoS) is expanding as it is being tested. Therefore, validators from both chains will be rewarded. The network will gradually transition into using the Beacon Chain while the PoW chain will likely be phased out.
Phase 3 and Beyond
Beyond Phase 2, the development timeline becomes blurry. The initial plans have to be executed first. One thing is certain, the Ethereum developers intend to continually improve the protocol to meet the growing demands of the industry.
This article is published on BitPinas: What Happens When Ethereum Switches to Proof of Stake?