Macro Report on Ethereum 2.0 2020

Welcome to our Macro Report on Ethereum 2.0 (ETH 2.0), a multi-year system upgrade to the Ethereum network, the first phase of which is expected to launch at the end of 2020, bringing with it a new consensus algorithm.

Aug 10, 2021
Macro Report on Ethereum 2.0 2020

Welcome to our Macro Report on Ethereum 2.0 (ETH 2.0), a multi-year system upgrade to the Ethereum network, the first phase of which is expected to launch at the end of 2020, bringing with it a new consensus algorithm.

Key Takeaways

  • ETH 2.0 will implement two main features, Proof-of-Stake and Sharding, to improve the security and scalability of the network;
  • Proof-of-Stake is a much more efficient and arguably fairer method to distribute transaction validation responsibilities and rewards versus Proof-of-Work, which disproportionately rewards large miners and consumes copious amount of energy on wasteful calculations to secure the network;
  • Sharding, although complex, is one of the most promising methods to add scalability to a blockchain network and in tandem with layer 2 scaling solutions, which can increase scalability by a factor of hundreds, if not thousands;
  • ETH 2.0 will be rolled out in three phases. Phase 0, to be released in December 2020, will only implement the Beacon Chain. Phase 1 will include sharding. It is not until Phase 2 in 2022 where dApp functionality will be enabled and Ethereum’s dApps can be migrated over to ETH 2.0 shard chains;
  • Validator returns can range from 2% to 20% depending on the number of validators participating in the network, but returns will likely be on the higher end at launch;
  • Becoming a validator can be technically challenging, although third party service providers will provide staking services on day one;
  • Being a validator to earn rewards can be attractive, but there are risks to consider – primarily, ETH staked will be locked up for at least one year, until the launch of Phase 1 in 2021.

Read the full PDF version of the Ethereum 2.0 here.

Tags

analysis

coins & tokens

crypto research

ETH

Ethereum

ethereum 2.0

proof-of-stake

scaling

sharding

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