The following is a thread on the upcoming mega transition of ethereum to a more secure, & scalable solution which is Ethereum 2.0
1/n It's a massive upgrade to Ethereum that we have now so that it becomes more SCALABLE, SECURE & ENERGY EFFICIENT.
Explaining these further :
SCALABLE: Current Ethereum blockchain can handle 15-45 transactions/second & hence, one has to pay a massive 'gas fee'.
2/n Now, what's a gas fee? A fee that you have to pay to make a transaction on Eth blockchain. It ranges from $50 to around $200 depending on the level of traffic on the chain.
But why do we have to pay this fee?
3/n Because right now there is extreme traffic on the Ethereum blockchain and this fee is to compensate for the energy required to process those transactions.
The upgrade would be able to handle up to 100,000 transactions/second or more, a massive increase.
4/n SECURE: The upgrade aims to be resistant to 51% attacks and offers a greater shield against them.
Understand that '51% attack' is a special kind of attack where miners try to take control of the network's mining rate and prevent other miners to take part.
5/n The protocol will automatically destroy their ETH if they tried to attack the network.
ENERGY EFFICIENT: Currently Ethereum is using the Proof of Work mechanism which is using tonnes of energy. It aims to shift to a Proof of Stake model soon which will tackle this issue.
6/n PoW and PoS are little complex topics and I'll dive deeper into them in another tweet. It will also cover points like Staking, who are Miners, Validators, and more.
For now, let's understand PoS only in simple terms.
7/n It means that a person can mine or validate block transactions according to how many coins they hold. This means the more coins owned by a miner, the more mining power they have. This is done so that you can be chosen as a validator who can produce a block and earn rewards.
8/n Eth2 introduces something called 'Beacon Chain'. What is it?
A huge blockchain introducing the PoS mechanism to Ethereum.
The backbone of Eth2.
Responsible for selecting validators.
A bridge between the current network & 2.0
Will coordinate the entire network.
9/n The next concept being introduced is 'Sharding'. It basically means to divide or split the database into multiple portions(chains) so that the load is distributed.
Why is it being done?
To reduce network congestion.
Increase no. of transactions/sec
10/n These new chains are called shards. There's only one shard right now and the upgrade aims to have 63 more shards. Our current blockchain will become one of the 64 shards when this happens.
This process of merging 1 + 63 chains is called Docking.
11/n You might come across the term 'Merge'. The current chain that is being used is called Mainnet which is using PoW. The Beacon Chain which is using PoS is running in parallel to the Mainnet. When these will combine, it will complete the Merge.
12/n So, this is my attempt to make you understand the new Ethereum upgrade that will complete by 2022.