Ethereum’s beacon chain started In December 2020, and while many saw this as the start of Ethereum 2.0, it was, in fact, only the beginning. Ethereum 2.0 is not just an upgrade but a careful and slow transition between the “old” blockchain commonly called ETH1 and the brand new ETH2 blockchain that will introduce proof of stake.
How far along is Ethereum 2.0, and when will we witness the final act of Ethereum’s year-long journey towards a new consensus model and sharding?
Altair will prepare the beacon chain
The last upgrade for Ethereum was called London and happened at the beginning of August this year. London introduced EIP-1559 which changed the fee structure of Ethereum. While London was preparing ETH1, the next upgrade, which is called Altair, will prepare ETH2.
The beacon chain is already running and works completely apart from ETH1, the de facto Ethereum blockchain. At some point, both have to merge, and during that process, there will be an assignment of new roles. The beacon chain (ETH2) will become the new consensus layer, and the current blockchain (ETH1) will become the execution layer.
Altair is an important milestone before starting the merger and reaching the first and maybe most important step of shifting Ethereum from proof of work towards proof of stake.
Slashing is introduced
Altair is expected to start on October 27th at epoch 74240 and will also introduce EIP-2982. Ethereum 2.0 will depend on so-called validators, which will each have to lock 32 Ether to participate in that role and validate transactions. In return, validators will receive a reward similar to the miners. But what if a validator is playing unfair or is inactive?
To make sure that nobody is leaving their post, EIP-2982 is introducing slashing. Slashing will punish dishonest validators and reinsure that receiving a reward is not the only incentive. With slashing, all validators also have skin in the game because they now even lose money if they choose to act maliciously.
With Altair starting at the end of October, it is expected that the merge between ETH1 and ETH2 could happen as early as Q1 2022. A successful kickstart of proof of stake would be very bullish for Ethereum, but not the end of the journey.
It would still require a lot of time to introduce sharding and activate the first 64 shards. Each shard will run its applications and interact with the consensus layer, which will increase the transactions throughput and speed. Developing and testing could take until the year 2023.
So, is Ethereum 2.0 coming? Yes, it is, but it will take some time until it’s fully finished.