What Is Ethereum 2.0? A Primer

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ethereum 2.0

In Brief:

  • The main feature of Ethereum 2.0 is the transition from proof-of-work (PoW) to proof-of-stake (PoS).
  • PoS improves upon PoW by being a lot more scalable and accessible.
  • Ethereum’s PoS implementation “Casper” will punish validators for acting sub-optimally or maliciously.
  • Sharding will help in scaling up Ethereum’s throughput exponentially.
  • Sharding breaks down data verification into smaller shards and enables parallel processing.
  • Ethereum 2.0 launch has been split into Phase 0., Phase 1, Phase 1.5, and Phase 2.

Smart contract expert, Joseph Chow, made a pretty interesting analogy while comparing Ethereum 1.0 and Ethereum 2.0. According to him, comparing ETH1 and ETH2 is the same as comparing a road and a highway due to the upgrades in overall scalability, throughput, and security. We have recently gone through the Berlin hardfork, and this coming July, Ethereum will finish the London hardfork – a significant milestone on the road to Ethereum 2.0.

Which brings us to the main topic of the day – What exactly is Ethereum 2.0? What are the changes that ETH 2.0 is going to bring into the original Ethereum protocol?

Well, let’s take a look.

Transitioning from PoW to PoS

As you may already know, the Ethereum network is looking to transition from proof-of-work (PoW) to proof-of-stake (PoS).

So, why are they doing this in the first place? Turns out that while PoW is proven and highly secure, it faces two major problems:

Problem #1: Barriers-to-Entry

As things stand, the barriers to entry for mining are incredibly high. Not only is the mining hardware costly, but the cost of mining itself is entirely off the scale. Plus, to offset the production costs, the miner needs to relocate to an area that uses alternative energy sources and has an overall cold climate. This is the reason why Chinese miners have started migrating en-masse to the Sichuan province.

PoS has a lower barrier to entry than PoW. It’s much simpler for an average investor to buy Ethereum tokens and stake them in the staking pool rather than buy an entire mining infrastructure and pay bloated up electricity bills every month.

Problem #2: Lack of Scalability

Usually, each block in a blockchain is mined sequentially to prioritize security. Due to limited block size, Ethereum could process only a limited amount of data within the blocks. What this means is that during times of high congestion, the network slows down considerably. This is another problem that PoS can solve since sharding requires PoS from proper implementation (more on this later).

What is PoS?

In PoS, validators (users selected to mine or validate block transactions) are chosen via various random selection and combinations of wealth or coin age. In this system, the mining system is completely virtual, and the individual node’s hashrate is directly proportional to their stake instead of individual computational power.

How Does Ethereum’s PoS Work?

Ethereum’s implementation of PoS is known as the Casper protocol. A validator must lock up 32 ETH tokens. In this system, Ethereum’s validators are punished for sub-optimal or malicious behavior wherein they get punished for acting against the interests of the system. The punishment works as such:

  • If the validator fails to remain online and performs sub-optimally, their block reward will moderately decrease.
  • However, if the community determines that the validator was acting outright maliciously, then the network will slash some or all of their 32 staked ETH.

This is a critical step because it essentially guarantees that the incentives of the validators are aligned with the overall Ethereum network.

What is Sharding?

Ethereum 2.0 will be improving overall network scalability by introducing “sharding.” Now, if you have worked with databases before, then you should be familiar with this term. Simply put, if you are dealing with a bulky database, you can horizontally partition it into smaller chunks or “shards.” Following that, you may process these shards parallelly and drastically reduce the processing time.

Wait, why “horizontally?” Why not vertically?

Well, let’s take an example.

Name Age
Alice 24
Bob 23
Carla 21
Dave 20


Now, if we vertically partition this table, this is what we get.






As you can see, the resultant tables are completely different from the original table.

However, what if we do a horizontal partition?

Name Age
Alice 24
Bob 23



Name Age
Carla 21
Dave 20


Now, as you can see, these two tables are just smaller versions of the original table. In other words, these are the shards of the original database. This significantly reduces the amount of data that you are working with and makes traversal much simpler.

Ok, that sounds cool. But what’s the connection with Ethereum?

Blockchains can be thought of as highly sophisticated decentralized databases. Sharding breaks up the entire data verification process into smaller shards. Now, the whole network will be able to process all the tasks parallely and increase throughput significantly.

To better understand this, consider the following example.

  • There is a hypothetical network with three nodes – A, B, and C.
  • Let’s imagine that they have to verify a block B.
  • The block gets broken down into three shards B1, B2, and B3.
  • Instead of the three nodes going through the block one after another, each node needs to take care of one single shard of the block.

Why Do We Prefer PoS For Sharding?

PoS implementation makes sharding a lot simpler. In a sharded PoW chain, a powerful miner can use their superior hash power to take control of an individual shard. This could lead to increased centralization.

When Is Ethereum 2.0 Coming?

Ethereum 2.0 will be launched over 4 phases – Phase 0, Phase 1, Phase 1.5, and Phase 2.

  • Phase 0: Launched in December 2020, when the Beacon Chain was deployed. This was the first step towards the transition into proof-of-stake. As of now, the beacon chain already has >120,000 active validators with 3,874,315 ETH staked.
  • Phase 1: This stage will be launched in 2021 with the activation of sharding. The Ethereum 2.0 state will be split into 64 shard chains.
  • Phase 1.5: The original Ethereum 1.0 chain will become one of Ethereum 2.0’s shard chains. This ensures that token holders will not need to swap tokens to enter the new ecosystem.
  • Phase 2: In this phase, both sharding and PoS will be properly integrated into the Ethereum 2.0 blockchain.

Where Can I Get Ethereum?

Alright, so now that you have read up on everything, here is how you can buy ETH and get into the wonderfully innovative world of the Ethereum ecosystem. Just make an account on CoinSmart and finish your KYC. After that, you can easily buy ETH with CAD or EUR. It really is that simple, check it out here.

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It is difficult to start PoW mining because it has:

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