Ethereum 1.0 was the first decentralized ecosystem to fully implement smart contracts. However, with the popularity came increased load that the original network was unable to fully deal with, and a set of new solutions was needed to grant Ethereum a performance increase—meet Ethereum Upgrades, formerly known as Ethereum 2.0, that aims to do just that.
Ethereum is an incredibly capable network, but it has some limitations that make true mass adoption challenging. These can be summarized in three key points—scalability, security, and environmentally-friendly operation—which are often referred to as the trilemma of blockchains. Ethereum actually gets security right, however, it lags behind when it comes to the other two issues - scalability and being environmentally friendly.
Ethereum 1.0 uses Proof-of-Work (PoW) as its consensus mechanism, which is intended to guarantee safe transactions for the network. While it does that masterfully, it performs inefficiently under pressure. In other words, the more users are engaging with Ethereum, the slower it becomes. Another limitation PoW poses is high transaction fees, that are also increasing as a result of increased network usage. On top of that, all Ethereum transactions run through one single blockchain, which can lead to clogged transaction flow and slow processing. Needless to say, these essentially make Ethereum 1.0 unscalable globally.
Ethereum 1.0’s PoW algorithm utilizes computation as the basis of trust. Despite this being a secure mechanism, the specialized computers that are able to carry out the required work consume tremendous electricity. Some argue that this is an unnecessary waste of energy, and that there should be other, eco-friendly ways of securing the network.
To address the above limitations, the decentralized autonomous organization (DAO) of the network decided to implement a set of updates dubbed Ethereum Upgrades (formerly known as Ethereum 2.0). The improvements include switching the consensus mechanism from Proof-of-Work (PoW) to Proof-of-Stake (PoS), and turning Ethereum from a single chain ecosystem to a network of multiple blockchains.
Contrary to PoW, Proof-of-Stake (PoS) does not rely on computational work, but rather a collateral in ETH that nodes (network maintainers) put up to participate. This drastically reduces energy consumption, while keeping Ethereum as secure as before.
By shifting from running all transactions on one chain to distributing them across many, Ethereum will be able to efficiently scale to global adoption with low fees and fast processing.
It’s hard to tell the exact date for Ethereum Upgrades, as it is more of an ongoing process rather than a single point in time. The second, current phase of the update is underway at the time of writing with an expected delivery date of somewhen in Q2, 2022.
Ethereum 1.0 is one of the most popular crypto ecosystems of its time, despite its limitations. However, Ethereum Upgrades (formerly Ethereum 2.0) plans to address scalability and operational constraints in the near future, and quite literally bring the network up to speed for many years to come.
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