Phase 0
In phase 0 of the Ethereum 2.0 upgrade we are in, the Beacon Chain is now being introduced. The Beacon Chain, which was launched on December 1, 2020, marks the shift to PoS, allowing users to lock in their Ethereum (specifically the sum of 32 ETH) to become validators. Phase 0 does not affect the Ethereum blockchain, and the Beacon chain it exists alongside the main Ethereum network. However, the goal is to merge the Mainnet into the Beacon Chain’s controlled PoS system.
Merge
Phase 1 is due to start in early 2022 and is the next stage that will merge the Beacon Chain with the mainnet by officially switching to the PoS algorithm. From phase 1 onwards, Eth2 will house Ethereum’s entire trading history and support smart contracts on the PoS network. This is where stakers and validators will take over, it is expected that many miners will stake their ETH to become validators as mining (PoW) will go away.
Sharding
At the beginning of the phase 1 design the developers intend to introduce sharding (shard = fragment). Sharding is a process of dividing data, in this case into smaller chains known as shards. Eth 2 will have 64 shards, i.e., it will distribute the content of the network to 64 new chains. Shards will facilitate a node by reducing hardware requirements. This will take place after the merge. This will greatly avoid network congestion.
Phase 2
Finally in phase 2 Ethereum WebAssembly or eWASM will be introduced. WebAssembly was created by the world wide web consortium and is designed to make Ethereum much more efficient than it is now.
Ethereum currently has an Ethereum virtual machine or EVM. EVM allows Ethereum to function as a global supercomputer. Users have access worldwide by running smart contracts and interacting with decentralized applications (dApps). EVM stores all the necessary code to execute orders on Ethereum, while at the same time it facilitates wallet addresses for transactions and calculates the “gas fees” for each transaction.
EVM is difficult to upgrade as it has been written in the Solidity programming language, from the same one where smart contract are created and its creator is Gavin Woods co-founder Ethereum and founder Polkadot. eWASM was designed to replace EVM.
Why it matters
Although the ETH 2.0 upgrade had long been planned, its implementation could not have come at a better time. Ethereum has become the most popular network for creating a variety of dApp applications, from gaming to financial services, thanks to its smart contract capabilities. The increased adoption and use of Ethereum has created additional demand, sometimes straining the network.
For example, the network has struggled to accommodate the explosive DeFi sector with transaction fees skyrocketing recently. This was a timely indication that Ethereum, as currently designed, is not viable. ETH 2.0 will solve these problems by substantially enhancing network capacity, thereby reducing transaction fees and allowing more innovative solutions to be created.
There is great anticipation among the wider crypto community for the release of ETH 2.0 after a series of postponements this year. Therefore, the developers of Ethereum are very careful, therefore, the release is pending until the full control of the code is completed. As things stand, the Ethereum community will have to wait much longer to make the transition to ETH 2.0. Given the size of this upgrade, the wait is worth it. Or as the saying goes, good things come to those who wait.