Ethereum 2.0 is no longer about just the potential to bring Ethereum to a much more diverse audience than ever before.
On June 19, 2020, Ethereum increased its gas limit by 25% from 10 million to 12.5 million. In no less than two days, this newfound capacity was used up, bringing the block use right back to 100%. This cat-and-mouse game between a higher gas limit and a surge in use has occurred the last three times Ethereum has raised its gas limit. There is evidently a genuine market demand to use Ethereum, but the gas prices are prohibitively expensive for most use cases. This is where Ethereum 2.0 comes in.
What does Ethereum 2.0 bring to the table? In a nutshell, it is a multiyear plan to improve the scalability, security and programmability of Ethereum, without compromising on decentralization. Under what Vitalik Butirin refers to as a “rollup-centric ethereum,” Ethereum will soon be able to scale to around 3,000 transactions per second with rollups alone — without Eth2 — and up to 100,000 transactions per second once Ethereum 2.0 Phase 1 comes along, through the use of sharded chains with data storage.
Related: Ethereum 2.0 staking, explained
After experiencing this summer’s surge in gas fees, which sometimes even surpassed 450 Gwei, it is clear that scalability improvements cannot come soon enough. The coming improvements will not only significantly lower the barrier to entry to otherwise prohibitively expensive smart contracts but also provide a whole new array of opportunities for developers to combine Ethereum’s composable “money legos” in ways that were previously infeasible.
Another key feature of Ethereum 2.0 that often goes overlooked is its improved security. Proof-of-stake offers different security guarantees than proof-of-work. For instance, if someone has the means to perform a 51% attack on a PoW network, they can continuously perform these attacks, even after the chain soft forks. Under PoS, validators are not only rewarded for acting honestly but also penalized for attempting to cheat the network.
One such penalty in Eth2 is called a “slashing.” Slashing occurs when a validator is caught acting in a provably destructive manner. When this happens, the validator is forced to exit, penalizing some of or all of its financial stake. The end result is that an attacker cannot attack the chain without incurring a significant financial loss. PoW does not have an equally impactful in-protocol financial disincentive.
In addition, the Ethereum Foundation is building a dedicated security team for Eth2 to ensure the robustness and safety of the upcoming upgrade. This security effort comes in addition to the Eth2 special audit by Least Authority and the many others for the Eth2 clients preparing for launch. One thing is clear: Security continues to be one of the top priorities throughout the transition process.
Not only will it be harder to attack the network thanks to disincentives like slashing, but the network will also have the potential to be more decentralized. While most PoS chains have a small number of validators, Ethereum 2.0 will activate with at least 16,384 validators staking their Ether (ETH). On top of that, PoW mining pools primarily exist to make income streams more consistent, but since this is not a problem under PoS, we are less likely to end up with a handful of pools controlling a majority of the network.
With this update, Eth2 clients will help ensure that the full benefits of Ethereum can be enjoyed on a myriad of devices, including resource-constrained devices such as older mobile phones and embedded devices, not just powerful smartphones and PCs.
Decentralization and non-censorship
Currently, many services built on Ethereum rely on Infura, a hosted Ethereum node cluster that provides scalable access to Ethereum. However, in order for the Ethereum ecosystem to be both secure and successful, Eth2 clients should make it an important long-term goal to replace all centralized elements, like Infura, with decentralized alternatives. Doing so is both a matter of principle and a valuable way to strengthen the privacy and individual sovereignty of the Ethereum ecosystem at large.
As part of the Ethereum community, it is necessary to create the foundations for a network that can support a whole new host of innovative platforms and ideas. In order to achieve widespread adoption, Ethereum must be usable everywhere around the world, with the same speed and performance as current high-throughput networks. It must also be usable by anyone in the world, regardless of the hardware available to them, in a manner that is resistant to censorship.
After this week’s confirmation for a Dec. 1 launch, and with rollup scaling solutions improving in leaps and bounds every week, Ethereum’s time has finally arrived.
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