Everything you need to know about Ethereum 2.0 in 2020

Author: Yilun Cheng

Source: Crypto Valley

• Phase 0 of Ethereum 2.0 will be launched as early as the end of the second quarter of this year;
• Ethereum 2.0 is the PoS version of the current Ethereum mainnet and introduces sharding technology to improve network throughput;
• According to Ethereum founder Vitalik Buterin, once the two networks are integrated, the introduction of PoS will cause more than 10 million ETH to be locked into the protocol;
• Although risks still exist, various mechanisms, including anti-correlated punishment systems, can prevent the problem of equity concentration.

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Phase 0 of Ethereum 2.0, the first step of a multi-stage deployment of extensive protocol evolution, is moving towards an important milestone.

Preston van Loon, CEO of the Ethereum 2.0 client implementation team, Prysmatic Lab, told The Block that the plan will soon be unveiled in the main multi-client testnet. When it comes to the future, he expects to launch Phase 0 by the end of the second quarter of 2020.

According to the call of the Ethereum 2.0 executors in June 2019, the main stage of Phase 0 was originally scheduled to start on January 13, 2020. However, the release plan was postponed because the number of shards (a key attribute of the Ethereum 2.0 blockchain) was reduced from 1024 to 64 by the developer at the last moment of the decision in October 2019.

The developer's change was to speed up cross-fragment communication, but additional work caused delays in the mainnet startup.

Preston van Loon told The Block that the single-client test period for the project is nearing completion. Developers will soon implement a major multi-client test network that will run for at least two months before the mainnet launch.

He says:

"The latest development of Phase 0 is that all configuration specifications have been completed, we have frozen all the expected functions, and standardized the encryption library. The Ethernet test network is now running the latest data."

Although the specific timetable may still change, Preston van Loon is expected to launch the mainnet by the end of the second quarter.

There are currently eight Ethereum 2.0 clients, many of which have begun testing their functionality.

For example, Prysm of Prysmatic Labs launched the "Sapphire" test network in June 2019. According to the latest news released by Prysmatic Labs on January 31, the test network now has more than 35,000 valid validators. Sigma Prime's Lighthouse and Status's Nimbus are also running their own testnets.

In December 2019, Parity's Shasper connected to Prysm on the Sapphire test network, making Sapphire the first public multi-client Ethereum 2.0 test network. But Preston van Loon made it clear that they have not seriously tried to run a single multi-client testnet.

He says:

"We will push this single multi-client testnet before we fully understand the standardization of cryptographic libraries. This will be completed in a few weeks."

"I am optimistic that we can promote the multi-client testnet by the end of February. We will then run the testnet for several months before the mainnet launch is certified."

Preston van Loon said that before the mainnet of Phase 0 is released, there are some strict requirements to be met. It is worth noting that two or more compatible clients need to run a multi-client test network together for at least two months. Everyone has confidence in this network.

Other ecosystem members must also sign the agreement because it requires the approval of the client executor, the need for an auditor to check the security of the code, and the consent of the Ethereum Foundation.

Preston van Loon sees these measures as "confidence boosters" to convince stakeholders that they will not suffer losses from the new system.

Ethereum co-founder Vitalik Buterin agreed with Preston van Loon's optimism, adding: "The development of Ethereum 2.0.0 is progressing smoothly."

Buterin told The Block that the last big challenge developers need to solve is peer-to-peer networking.

He says:

"The problem with peer-to-peer networks is that the large amount of information sent by all validators adds a lot of bytes to the network. Although it's less than a few megabytes per second, we are still working to reduce this.

Buterin added:

"At the moment, this is just a matter of optimizing and ensuring system security."

Simplify Ethereum 2.0: Proof of Stake and Sharding Technology

Ethereum 2.0 is the current proof-of-stake (PoS) version of the Ethereum mainnet, which introduces sharding technology to improve network throughput.

Preston van Loon said, "I always wondered why Ethereum is not the largest blockchain. I think the reason is that it has a lot of unsatisfactory aspects in terms of user experience, and its scalability is not very good … I guess The price of ETH will fall, not only because of the uncertainty of Ethereum 2.0, but also for other reasons. "

According to him, the Ethereum 2.0 update is designed to address these issues.

As The Block researcher Matteo Leibowitz previously pointed out, PoS is theoretically superior to proof-of-work (PoW) in many ways. Its energy consumption is lower, it is easier to reason from a security perspective, the participation cost is lower, and it needs to be fragmented due to its final characteristics.

The new sharding structure aims to improve the scalability of the Ethereum blockchain.

Preston van Loon mentioned in a blog post that in the Ethereum 1.0 system, each node running on Ethereum must process every transaction that moves through the network. Although this method is de-neutral and secure, it limits the scalability of the network and increases the risk of the entire system being blocked.

He said that sharding technology provides a solution to the scalability problem without compromising the security and decentralization of the network.

In Ethereum 2.0, there will be a central blockchain, the beacon chain, which coordinates all 64 side chains called "shards." Each shard will serve as a complete PoS system, containing an independent status and transaction history. Each node only processes transactions for a specific shard, not all network transactions.

Preston van Loon also said: "Ethereum 1.0 does not scale very well. Globally, it does not support any large use cases. With Ethereum 2.0, you will increase throughput by the number of shards you have. We are launching 64 shards, so your capacity will be 64 times larger than before. "

Currently, there are some alternative solutions for Ethereum 2.0, including Polkadot, NEAR, and Avalanche. In particular, NEAR adopted a similar design approach to Ethereum 2.0-they all have beacon chains, shards, and shared blocks that provide input to the beacon chain.

However, according to Buterin, despite these similarities, the two agreements have very different priorities.

"NEAR is eager to have more application-specific protocols, and Ethereum's approach is more similar to BTC. Therefore, in Ethereum people have a simple base layer and can use a programming language or a second layer to Build something else. "

In addition, Buterin believes that many alternative solutions have not realized that the life of the project depends more on the community than the underlying technology.

He says:

"They brought a huge sum of money, and the entire project was closed. Assume that once the project starts, people will flock in."

"They're taking a more corporate approach to building the chain, but I don't think it will have any effect in the end."

What happens after the launch of the mainnet in phase 0?

According to an article on EthHub, Ethereum 2.0 was launched in phases:

• Phase 0 will have two active Ethereum chains: the current PoW main chain and the Ethereum 2.0 beacon chain.
• The first phase will focus on the construction and deployment of 64 shard chains, although the side chain will only serve as a data processing layer, with no shard status execution or account balance.
• The second phase will introduce structured chain states, smart contracts, EWASM-based virtual machines, and other functions that integrate the entire system and enable transaction processing on the sidechain. Any plans after Phase 2 are still subject to major revisions.

Buterin also told The Block that, in addition to Phase 0, the Ethereum 2.0 team is already researching and developing the specifications of Phases 1 and 2, and the work of Phase 1 is now basically complete.

He says:

"The core design for these phases has been identified for quite some time. There are just a few details that have yet to be optimized."

"For example, developers are still optimizing the Proof-of-Custody game. This is a fairly new mechanism to ensure that blocks are cleaned up and verified before they are cancelled."

In addition, the data availability check protocol is still being optimized. Developers need to ensure that there is enough data to build the entire block.

Buterin says:

"No one has ever done this. We want a client to do this at some point."

Another key research issue involves the integration between the Ethereum 1.0 and Ethereum 2.0 chains.

According to the current method, the two chains will not merge until the second stage. Buterer noted that the community "wants Ethereum 1.0 and Ethereum 2.0 to work together, rather than work as separate ecosystems for a long time."

On December 19, Buterin proposed plans to accelerate the merger of Ethereum 1.0 and Ethereum 2.0. In the new process, the Ethereum 1.0 chain will exist as a shard chain in the Ethereum 2.0 system. There will be a new "Ethereum 1.0 friendly validator" that simultaneously maintains the beacon chain of the old version of the Ethereum 1.0 node and the new version of the Ethereum 2.0.

Buterin told The Block: "I think the reason why a lot of people in the Ethereum community want to do this is that they care about scalability in the first place. This proposal will make verifying a single Ethereum 1.0 block more feasible without having to store a considerable amount Of the entire Ethereum 1.0 status. "

Upcoming migration

In terms of user migration, the current design has a one-way bridge from Ethereum 1.0 to Ethereum 2.0.

But Preston van Loon said the motivation for the migration will depend on the type of migrant.

For example, Stakers is encouraged to migrate as early as possible because the fewer valid verifications, the higher the reward. On the other hand, the establishment of decentralized applications (dapps) in Ethereum will be attracted by the high capacity of Ethereum 2.0 in the second stage (that is, when state execution and smart contract platform implementation).

"But if there is no capacity problem with decentralized applications, then they have no incentive to move forward. Because they want to stay where the user is. In the worst case scenario, I think big things will happen at some point. Scale migration, not choice migration. We just bring everyone together and separate the connection between the two. "

Although designing the migration process is a complex technical issue, both van Loon and Buterin want to design a relatively smooth migration experience for users.

van Loon said: "On the back end, this is a very complicated process. But for users, a new client or provider can be used with just a few clicks of a button. It must be easy to do otherwise, or people Wouldn't do it. "

Buterin agreed, but pointed out that in a short period of time, the system may not have any transactions.

He says:

"The challenge is mainly on the client and application developers. If the migration issue is technically resolved, it will be intuitive. But the migration may result in no transactions for one to two hours."

More than 10 million Ethereum locked on Ethereum 2.0

A previous Bitcoinist report stated that according to Buterin's rough estimate, moving to the PoS model could lock in about 10 million Ether.

In an interview with The Block, Buterin predicted that after the merger of the Ethereum 1.0 and Ethereum 2.0 systems, the total amount of pledged ether will far exceed 10 million.

He said: "My guess is that in Phase 0, we will see a small amount of Ethereum pledged, which may only be a few million. But in the first phase, especially after the merger, this amount may exceed 10 million . "

At the same time, the Ethereum Foundation is conducting economic modeling to obtain specific numbers of validator costs and rewards, but most of the information can only be obtained after the mainnet of Phase 0 is launched.

He says:

"We recognize that the information obtained through analysis alone is limited. One of the reasons we want to go to stage 0 before stage 1 is that we want to know exactly how much there will be before a lot of activity on the chain. participate."

So far, Ethereum 2.0 does not have a fixed release schedule. Buterer believes that because the Ethereum network is not used to store value, it is used to build applications. Therefore, it is better to have no fixed publication time.

He said: "I think people value security more than guaranteeing a large number of issuances. If we say that everything is transaction fees, then if there is almost no transaction fees for a period of time, then the network has no security during this period . And in our model, when people pledge, interest rates are higher. "

Buterin added that this could be an alternative to Ethereum in the future. Because a lot of Ethereum is pledged in Ethereum 2.0, instead of being stored in other application protocols such as MakerDAO, Uniswap.

He said: "I think Ethereum locked in Ethereum 2.0 is more competitive than Ethereum locked in other protocols. This will be very different from the current Ethereum market. Most of the Ethereum market is just doing nothing , Sitting in people's cold wallets. "

Risk of equity concentration

Now that Ethereum is ready to transition to a PoS system, the possibility of equity concentration needs to be considered. This possibility will bring serious security risks to the agreement.

Buterin explained that there are several mechanisms to curb equity concentration.

First, in a sharding system, the number of transactions a person must process is proportional to the amount of ether he pledges. Therefore, even if they merge, they still need to verify the same amount of data; in this regard, the merge will not save them any time or effort.

Secondly, Ethereum 2.0 has an anti-correlation penalty system. In this system, the more validators that go offline at the same time, the heavier the penalty. Therefore, it is more risky to invest a large amount of equity in a service or exchange.

Finally, developers are trying to improve the network design to make it easier and cheaper for users to run and pledge Ethereum 2.0 nodes.

However, according to Buterin, the risks remain.

"From the beginning, equity concentration has been one of our concerns. We have added different mechanisms to the agreement to prevent equity concentration. But despite this, many people will become lazy and we will see Central suppliers will be heavily pledged. "

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