Ether took its first step towards a fully realized ETH2 in December, as it launched Phase 0 at 12 noon UTC. Phase 0 is the Beacon Chain, which will introduce proof-of-stake to the Ethereum ecosystem.
So, what comes next?
Ethereum is moving from a proof-of-work blockchain, where computing power determines rewards, to a proof-of-stake platform where anyone who locks up their ETH can be chosen to validate blocks.
The move will happen in stages, with the Beacon Chain operating alongside the current Ethereum network for a while. The first step to launching this mainnet was to accumulate 524,288 Ether in its deposit contract.
With Phase 0 launched and underway, we look ahead to Phase 1 and the introduction of shard chains.
Phase 1: Shard Chains
If an Ethereum node is too expensive to run, only a few people will be able to operate one, making the network more centralized. Requiring every transaction to be processed by every node also means that scalability is nearly impossible. Sharding and shard chains are a potential solution to both these problems.
Imagine that you need to arrange a set of ten records, in a manner that makes finding and sorting through them easier.
You could just toss them into one giant pile on a desk. That’s the certainly the most efficient solution for you. And sorting through ten files won’t take too much time, right?
But what if there were a hundred records? Or a thousand? Or 10,73,000 records?
Instead, you could break the records into more manageable chunks – alphabetically, for example. Later, if someone needs to find a record with S, they’d only need to look at sub-group S.
Sharding works with a similar concept, and greatly reduces the transaction cost.
According to the ETH2 road map, shard chains should ship sometime in 2021, depending on how quickly work progresses after the Beacon Chain is launched. These shards will give Ethereum more capacity to store and access data, but they won’t be used for executing code at first.
Phase 1.5 – the Docking
For now, the Ethereum mainnet will continue to be secured by proof-of-work, even while the Beacon Chain and its shard chains run in parallel using proof of stake.
When ready, these two systems will be merged together, sometime in 2021-’22.
The mainnet will bring the ability to run smart contracts into the proof-of-stake system, plus the full history and current state of Ethereum, to ensure that the transition is smooth for all ETH holders and users.
And so, we get a fully-functioning, new and improved ETH2!