Projected to launch on January 3rd, 2021, the next generation of Ethereum blockchain will go live even sooner, on December 1st after being in the works for years.
This next-gen Ethereum will see the blockchain go from a Proof-of-Work (PoW) model to a Proof-of-Stake (PoS) model where participants can “tie their cryptocurrency to the network as collateral”, TechRadar states.
According to the official announcement, for the launch of Ethereum 2.0 to “take effect”, 16,384 validators will need to stake a minimum of 32 ether which is worth Sh1,393,920 ($12,800) at per current market rates. Staking ether means that cryptocurrency will underpin the network.
“To trigger genesis at this time, there must be at least 16384 32-ETH validator deposits 7 days prior to December 1. If not, genesis will be triggered 7 days after this threshold has been met (whenever that may be).”
Once the minimum amount has been staked, it will trigger the launch of Beacon Chain (the infrastructure that will facilitate the switch) in the Ethereum 2.0 genesis event.
“We’ve hardened Ethereum 2.0 as much as we can with simulated test environments, formal verifications, and audits,” said Joe Lubin, Ethereum co-founder, and CEO at ConsenSys. “We are incredibly excited to see the community galvanize around the first phase of Eth2, now with real value at stake.”
The most important change in Ethereum 2.0 is transitioning the blockchain from PoW to PoS. What this means is that Ethereum will shift from a PoW system where one unit of computational power equates to one unit of mining power to a PoS system where one unit of value secures one unit of mining power for the validator.
Both systems are designed to incentivize network maintenance while ensuring that the data on the blockchain is tamper-proof.
Another big change is Sharding. This means that only a portion of the nodes will be needed to validate any given transaction (instead of all of them) and this increases the network’s throughput.
This will fix stability problems which in the past, have not allowed the blockchain to compete with legacy systems.
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