What Is Ethereum 2.0?


Ethereum was created in the third quarter of 2015, primarily to build decentralized applications. Also, it has its own virtual currency called Ether (ETH). Shortly it will be rolling out its newest version of Ethereum, Ethereum 2.0. Ethereum 2.0 will be a significant upgrade to the current version to enhance performance, usage, and adoption.


The upgrading of the Ethereum blockchain is not a unique concept in the Ethereum community. The idea has existed in the community since the birth of blockchain. As a matter of fact, there have already been some upgrades in the Ethereum platform following its launch in 2015. However, the launch of Ethereum 2.0 is more significant than any other updates because it will overhaul the Proof of Work design, to the new and improved Proof of Stake consensus algorithm.


Currently, Ethereum uses the Proof of Work consensus algorithm. This mechanism is the most popular consensus algorithm and is implemented by many blockchains, including Bitcoin, Ethereum, Litecoin, etc. It is an algorithm where miners are given rewards to solve a complex mathematical puzzle. Once the problem is solved, a block is added to the blockchain.

In a Proof of Stake (PoS) system, block producers are chosen from a pool of users that have coins staked or held in a wallet. The more coins a user has, the more likely he is to be chosen to add a block to the ledger.

PoS nodes are called validators. Validators need to have enough computing power to process transactions. But there is no additional need to guess random numbers or calculate hashes, making the required computing power significantly lower than PoW.


Blockchain is a chain of blocks that are mined sequentially. A finite amount of data can be stored in each block, measured as the block size. In the Ethereum network, only a limited amount of information is processed at a time. This limits the number of transactions that can be processed in a short period of time. Those transactions will have to wait in a line of subsequent blocks if the count of unverified transactions exceeds the amount a block can take.


With Proof of Work, miners have put their focus on creating and maintaining decentralized technologies. Though they are operational, it is not a cakewalk to become a miner. There are several considerations to make and items to purchase to set up the hardware for mining.

Ethereum 2.0 plans to level up the miners’ count by making it increasingly accessible for users to become a “miner”.

To address these issues, the Proof of Stake came into existence. This mechanism tries to replace miners in PoW with validators and stake in PoS. In Ethereum 2.0, miners will be replaced by validators who simply maintain the state of the network that they agreed upon. The validators receive rewards for validating the blocks of data. This also requires significantly less computing power than with the mining in PoW.

In order to be a validator, a user must have at least 32 ETH and transfer it into the official deposit contract developed by the Ethereum Foundation. Later, they will have to run the Ethereum 2.0 client software, and then propose & attest blocks on the ETH blockchain. Validators who correctly do the job of attestation will receive ETH as a reward, which will become a percentage of their stake.

The Proof of Stake will be embedded into Ethereum 2.0 as their first stage of the upgrade, referred to as phase 0. Following phase 0, even phase 1 and phase 2 will be rolled out in later years.


Several solutions are provided by Ethereum 2.0.

  • Proof of Stake (PoS)solutions such as Beacon and Casper will be the first significant upgrade to change the way Ethereum is mined.
  • Sharding is the process of splitting an extensive database into smaller parts so it can be managed easily. The same mechanism will be implemented into the Ethereum network as well. This will solve scalability issues and increase transaction speeds.
  • eWASM facilitates the faster execution of codes and capabilities for the EVM (Ethereum Virtual Machine).
  • Plasma and Raidenaddress the Lightning Network, where it can handle many transactions at a time.


Ethereum has always upgraded to actively solve minor issues and problems. But, the community has realized the issue of scalability and accessibility, coming up with Proof of Stake as its solution. This major upgrade will provide broader opportunities to the public to participate in the validation process and get rewarded in turn.