Ethereum 2.0: Less is more... and more is coming

Published at: Nov. 26, 2020

On June 19, 2020, Ethereum increased its gas limit by 25% from 10 million to 12.5 million. In no less than two days, this newfound capacity was used up, bringing the block use right back to 100%. This cat-and-mouse game between a higher gas limit and a surge in use has occurred the last three times Ethereum has raised its gas limit. There is evidently a genuine market demand to use Ethereum, but the gas prices are prohibitively expensive for most use cases. This is where Ethereum 2.0 comes in.

What does Ethereum 2.0 bring to the table? In a nutshell, it is a multiyear plan to improve the scalability, security and programmability of Ethereum, without compromising on decentralization. Under what Vitalik Butirin refers to as a “rollup-centric ethereum,” Ethereum will soon be able to scale to around 3,000 transactions per second with rollups alone — without Eth2 — and up to 100,000 transactions per second once Ethereum 2.0 Phase 1 comes along, through the use of sharded chains with data storage.

Related: Ethereum 2.0 staking, explained

After experiencing this summer’s surge in gas fees, which sometimes even surpassed 450 Gwei, it is clear that scalability improvements cannot come soon enough. The coming improvements will not only significantly lower the barrier to entry to otherwise prohibitively expensive smart contracts but also provide a whole new array of opportunities for developers to combine Ethereum’s composable “money legos” in ways that were previously infeasible.

Security

Another key feature of Ethereum 2.0 that often goes overlooked is its improved security. Proof-of-stake offers different security guarantees than proof-of-work. For instance, if someone has the means to perform a 51% attack on a PoW network, they can continuously perform these attacks, even after the chain soft forks. Under PoS, validators are not only rewarded for acting honestly but also penalized for attempting to cheat the network.

Related: Proof-of-stake or proof-of-work, that is the question

One such penalty in Eth2 is called a “slashing.” Slashing occurs when a validator is caught acting in a provably destructive manner. When this happens, the validator is forced to exit, penalizing some of or all of its financial stake. The end result is that an attacker cannot attack the chain without incurring a significant financial loss. PoW does not have an equally impactful in-protocol financial disincentive.

Related: Smart contract standards: Making DeFi transactions on Ethereum more secure

In addition, the Ethereum Foundation is building a dedicated security team for Eth2 to ensure the robustness and safety of the upcoming upgrade. This security effort comes in addition to the Eth2 special audit by Least Authority and the many others for the Eth2 clients preparing for launch. One thing is clear: Security continues to be one of the top priorities throughout the transition process.

Not only will it be harder to attack the network thanks to disincentives like slashing, but the network will also have the potential to be more decentralized. While most PoS chains have a small number of validators, Ethereum 2.0 will activate with at least 16,384 validators staking their Ether (ETH). On top of that, PoW mining pools primarily exist to make income streams more consistent, but since this is not a problem under PoS, we are less likely to end up with a handful of pools controlling a majority of the network.

Related: Ethereum 2.0’s long and winding road to scalability launch

With this update, Eth2 clients will help ensure that the full benefits of Ethereum can be enjoyed on a myriad of devices, including resource-constrained devices such as older mobile phones and embedded devices, not just powerful smartphones and PCs.

Decentralization and non-censorship

Currently, many services built on Ethereum rely on Infura, a hosted Ethereum node cluster that provides scalable access to Ethereum. However, in order for the Ethereum ecosystem to be both secure and successful, Eth2 clients should make it an important long-term goal to replace all centralized elements, like Infura, with decentralized alternatives. Doing so is both a matter of principle and a valuable way to strengthen the privacy and individual sovereignty of the Ethereum ecosystem at large.

As part of the Ethereum community, it is necessary to create the foundations for a network that can support a whole new host of innovative platforms and ideas. In order to achieve widespread adoption, Ethereum must be usable everywhere around the world, with the same speed and performance as current high-throughput networks. It must also be usable by anyone in the world, regardless of the hardware available to them, in a manner that is resistant to censorship.

After this week’s confirmation for a Dec. 1 launch, and with rollup scaling solutions improving in leaps and bounds every week, Ethereum’s time has finally arrived.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Corey Petty is the chief security lead at Status. Corey started his blockchain-focused research around 2012 as a personal hobby while doing his Ph.D. candidacy in computational chemical physics at Texas Tech University. He then went on to co-found The Bitcoin Podcast Network and still serves as a host of the flagship The Bitcoin Podcast and a more technical show Hashing It Out. Corey left academia and entered the data science and blockchain security industry for a few years, attempting to fix vulnerabilities in ICS/SCADA networks before finding his fit as the head of security at Status, where he remains today.
Tags
Related Posts
The importance of decentralized oracles: Interview with Sergey Nazarov
Chainlink co-founder Sergey Nazarov believes that increasing the decentralization and scalability of oracle technologies are key to ensure trust in the DeFi ecosystem. Oracles play a key role in the correct functioning of DeFI protocols by connecting them to real-world data. However, the trustworthiness of oracles becomes compromised in instances where they rely on a single data source to retrieve information. For instance, according to Nazarov, excessively centralized oracles enabled five recent flash loan attacks, which resulted in DeFi protocols losing around $40 million. Flash loans, a form of loan that does not require any collateral, can be used to …
Decentralization / Dec. 19, 2020
Microsoft transformed home computing — and this project wants to transform DeFi
A decentralized autonomous organization that governs a growing number of protocols says the initial vision for DeFi “has been corrupted by greed, inefficiency and sheer incompetence” — and says a drastic new approach is needed to ensure this sector reaches its full potential. According to Jigstack, the Ethereum landscape is fragmented, with thousands of DApps that offer varying degrees of quality. Millions of dollars in user funds have been lost, hacked, stolen or fraudulently misplaced in the past year — and “everything the industry promised to deliver has yet to be brought to life in a professional manner.” Jigstack’s founders …
Decentralization / April 15, 2021
Anchoring the worlds with flexible and high-performance on-chain governance
With adoption accelerating, blockchain’s potential to transform life in every way — from how business is conducted to labor division, operating systems and methods of collaboration — comes closer to fruition every day. If blockchain is the foundation to a truly digital model, then governance is the key to linking together the on and off-chain worlds. Governance itself encompasses and dictates the functionality of blockchain, from its organization structure to workflow execution, voting and incentives. Conceptually, governance can be understood as on and off-chain; the former being divided into protocol and contract levels. With the blockchain space rapidly diversifying, governance …
Decentralization / April 11, 2021
40%+ Ethereum PoS nodes are controlled by two addresses says Santiment data
Analysis from Santiment indicates that 46.15% of Ethereum’s PoS nodes are controlled by only two addresses. Hours after the Merge, the first address has validated about 188 blocks or 28.97% of the nodes, and the second has validated 16.18%, or 105 blocks. On Twitter, the data became a controversial topic as users debated about the impact of the Merge on centralization for the largest network in the world. According to our #Ethereum Post Merge Inflation dashboard, 46.15% of the #proofofstake nodes for storing data, processing transactions, and adding new #blockchain blocks can be attributed to just two addresses. This heavy …
Decentralization / Sept. 16, 2022
Crypto companies aim to build trust within future products and services
The cryptocurrency ecosystem underwent a turbulent year in 2022. Criticism inside and outside of the crypto industry was fueled following the collapse of FTX, Celsius, Three Arrows Capital and the Terra ecosystem. A number of losses have been recorded from these events. Blockchain analytics firm Chainalysis released a report in December of last year, which noted that the depegging of Terra’s stablecoin, Terra USD Classic (USTC), saw weekly-realized losses peak at $20.5 billion. Findings further show that the subsequent collapse of Three Arrows Capital and Celsius in June 2022 saw weekly-realized losses reach $33 billion. While these events may have …
Decentralization / Jan. 6, 2023