The transition to Ethereum 2.0 and its proof-of-stake consensus mechanism has started. Ethereum developers have announced the release of a “validator launchpad” on the upcoming Medalla testnet. The purpose is to educate and prepare future validators. The transition requires re-engineering the Ethereum platform and launching a new, more scalable version. As stated on their blog:
“The idea behind the launchpad is to make the process of becoming an eth2 validator as easy as possible, without compromising on security and education.”
The Three Stages Of Eth2
According to ethereum.org, eth2 will be released in several phases:
“Transitioning from proof-of-work to proof-of-stake, eth2 will be launched in at least 3 phases. The idea is to break up this transition into phases each focusing on a different aspect of eth2.
Phase 0 contains all of the machinery behind eth2’s consensus, it tracks the validators and their balances.
Phase 1 handles adding and storing the data associated with eth2.
Phase 2 adds execution on eth2 which enables programmers to be run on top of it.”
The Launchpad comes before phase 0 and enables validators to track and deposit test stakes on the Medalla multi-client testnet.
Proof-of-Stake vs. Proof-of-Work
Eth 2 seeks to decentralise and speed up the network, hence it shifts from proof-of-work (PoW) to proof-of-stake (PoS). Ethereum has operated a proof-of-work consensus, but proof-of-stake is generally considered to be far more energy-efficient and more cost-effective than mining.
The transition to PoS should improve Ethereum’s scalability issues and its inability to handle a large quantity of transactions under PoW.
In PoW, miners validate transactions through complex math solved by computer hardware and add them to a data block in a series, or chain, that is cryptographically secured.
In PoS, a person can mine or validate block transactions according to how many coins they hold. Hence, the more coins owned by a miner, the more mining power he or she has.
The Ethereum 2.0 Staking
The process of staking involves receiving rewards after locking up an amount of a given cryptocurrency in a wallet to participate in the operation of a blockchain. Anyone can participate in staking on any blockchain that operates a proof-of-stake consensus. To participate in Ethereum’s staking process, there will be a minimum threshold of 32 ETH. Also, validators will need to be running a validator node.
Ethereum’s core developers are heavily in favor of decentralization, which could be one of the main reasons for moving to PoS.