What Can We Expect From The Upcoming Ethereum 2.0

Many Ethereum users already know where to store their ETHs and ERC-20 tokens in various different Ethereum wallet applications (which you can check the guide here), but do these same users know the mechanism that will be used in Ethereum 2.0?

You see, Ethereum 2.0 is the most anticipated event in the Ethereum community. Yep, it’s the same event that will finally allow Ethereum to transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS). Most traders are anticipating this transition because they understand the market will heavily react to the ETH’s biggest utility change in the Ethereum blockchain.

But, what is Ethereum 2.0, exactly? And what are the most important takeaways from this mega transition project? Let’s analyze them together.

ETH Transfer To Ethereum 2.0 Will Get Through Several Different Phases

One thing to understand from the Ethereum 2.0 transition is the fact that the transition process will not be instant. It won’t be like "one-click" of migration from PoW to PoS. What they will do instead is that they will start with a PoW/PoS hybrid before eventually, they migrate to the full PoS mechanism.

The proposal is that the PoS will only be used on every 100th block that gets confirmed. So, the hybrid PoW/PoS mechanism will stay for a while until all PoS features are successfully rolled out in the mainnet.

And another thing to keep in mind is that the transfers of ETH between the main chain and the Ethereum 2.0 chain will be disabled in the beginning. Ethereum 2.0 developer Preston Van Loon confirmed the rumour and he said that the ETH transfer between the two chains will be disabled because otherwise there’ll be a big security loophole. The developers also want to make sure there won’t be any flaw where someone can easily print money.

32 Ether Is The Minimum Amount To Stake

One of the most repeated questions about Ethereum 2.0 is how many ETHs you need to stake in the PoS network. Well, according to Collin Myers (head of global product strategy at ConsenSys), you will need at least 32 Ether (ETH) in order to become a validator.

As for the approximate staking rewards for staking on Ethereum, it will be somewhere around 4.6% to 10.3%. If you don’t plan on staking Ethereum in the long term, this proposal might not look very attractive for you. But, if you believe that ETH’s valuation will be much higher in the future, staking your ETHs in the Ethereum PoS network will be a lucrative opportunity. If you are waiting to become a validator, you might want to store your ETHs in a proper Ethereum wallet to keep them safe. If you want to learn more about Ethereum wallets, you can check out this link.

Data Recalling Will Be More Expensive After Ethereum 2.0 Transition

DApp developers recalling and accessing data from Ethereum 2.0 will have to pay for more expensive transaction fees. However, they can also bypass this big change by making sure they don’t write apps with high witness sizes. These big cost increases are introduced because the full account of transactions will be stored in a PoS network.

In Ethereum 2.0, everything will be stateless which means developers can store bits of state they are interested in locally. The goal is to have an exchange of data where people can easily store the data on behalf of others.

There Won’t Be Atomic Transaction Execution

Another very important change in Ethereum 2.0 is the inability for transactions to happen atomically. As of now (in the current Ethereum state), developers can execute transactions atomically because all Ethereum DApps operate on a shared blockchain network.

However, in the future, developers won’t be allowed to execute transactions between different applications anymore. Ethereum 2.0 will natively break up different transaction load into different shards. By having this feature, there will be a new dynamic for transaction execution where one shard network won’t be able to know the full state of a different shard network

This improvement means that the balance load in Ethereum blockchain will become much more efficient and scalable in the long-term. However, it also means that DApp developers will have to face a new learning curve, and that might become an obstacle for adoption.

Summary

Ethereum 2.0 will introduce a series of significant improvements over the current version. The gradual changes from PoW to PoW/PoS hybrid and then to full PoS mechanism will be rolled out. The changes to data recall and atomic transaction executions will be introduced as well. While there are some features that DApp developers might not like, the majority of the Ethereum community anticipate this megaproject with a very optimistic mindset.

A strong blockchain advocate, crypto enthusiast, and secretly hoping crypto will go mainstream