Eth2 is the name of a set of updates that will improve the Ethereum protocol. Eth 2.0 aims to make the network more scalable, more secure, and more sustainable. Ethereum is an open-source and decentralized community, so the updates are being carried out by a large group of developers all around the world.
Proof of stake is a consensus mechanism. As of now, Ethereum operates on a proof of work consensus mechanism, as does Bitcoin. Proof of Work requires ALL of its miners to attempt to solve a complex sum, with the winner determined by the person who has the most powerful/quantity of hardware devices. The Proof of Stake model randomly chooses the winner based on the amount they have staked.
The ability to stake is currently live. Stake Ethereum to help secure the network and earn rewards.
There is nothing you need to do. Your Ethereum tokens will not be affected, certainly. If you have a larger amount of Ethereum, and you are interested in being a network validator through staking, you can do so at this time with a minimum of 32 ETH.
ETH 2.0 is being rolled out in phases, the last of which will be the docking upgrade (more on this later). The docking upgrade is estimated to be live in 2022, so ETH 2.0 is expected to be fully functional (all phases incorporated and working properly) in 2022.
The Beacon Chain is the first phase of upgrades to the Ethereum protocol. The Beacon Chain brings staking to Ethereum, lays the groundwork for future upgrades, and will eventually coordinate the new system. The beacon chain is already live, and brought the ability to stake ETH and become a network validator for the PoS (Proof of Stake) update.
Shard chains will expand Ethereum's capacity to process transactions and store data. By “sharding” the network into 64 new chains, Ethereum will increase its transaction throughput and reduce barriers to entry for node operators by reducing hardware requirements. The process of introducing the shard chains will happen over the course of 2021. By 2022, the process is estimated to be complete.
In 2022, the upgrades that occur with ETH 2.0 (The Beacon Chain and Sharding) will need to incorporate fully with the current Ethereum mainnet. This is expected to occur in 2022. When this happens, the network will be uniform and will run entirely on Proof of Stake.
1. Scalability: Currently the Ethereum network can handle 30 transactions per second. ETH 2.0 boasts 100,000 transactions per second. The ability to increase the amount of transactions per second by this magnitude means that developers can build DApps that are much more effective as the ability to operate smart contracts speeds up greatly.
2. Security: Eth 2.0’s Proof of Stake requires over 16,000 validators. This means that thousands of participants are required to stake large amounts of Ethereum in order to properly execute the code. A large amount of validators lends itself to a more secure network since it increases the decentralization of the network (no one single point of failure).
3. Sustainability: Ethereum 1.0’s slow transaction throughput (30 per second) and the high demand to use the protocol means that the network is expensive to use. Using the Ethereum protocol requires the spending of ETH in the form of gas fees. Individuals can speed up transactions by paying more ETH. At the time of writing, gas fees average around $120, up from around $11 one year ago. This means there is a higher barrier to entry for those who do not have a lot of Ethereum, so network usage and development is limited to those who can afford it. Increasing transaction throughput will reduce gas fees since it will increase the opportunities to create a transaction, meaning it won’t cost as much to “claim” your transaction. This is much more sustainable in the long run, since more people will be able to build and participate in Ethereum applications.