Things by their name
The Ethereum Foundation ended the year 2021 releasing the Kintsugi testnet, a new major step forward into a network operated under Proof-of-Stake (PoS).
Ethereum’s network currently operates under Proof-of-Work (PoW), a heritage of being based on the Bitcoin network, where this algorithm discourages and prevents undesired behaviour by requiring nodes to perform some kind of work that has a certain energy cost and that can be easily verified in the rest of the network.
However, part of the community infers that this method of validation induces a waste of energy, so they are going to push for a migration to a system of participation (PoS) where miners are replaced by validators who perform the same function, but instead of investing significant amounts of energy in the form of computational work, they put their ETH on the line as a guarantee against dishonest activity. If the validator does not play fair in the network, he can lose his staked coins gradually, which encourages an active and honest participation in favour of the network.
So, is Ethereum 2.0 the Proof-of-Stake step? Not exactly.
Ethereum 2.0 is a set of interconnected upgrades that will make Ethereum a more scalable, more secure and more sustainable network. But to get to this point, it first has to go through different phases.
Because Ethereum 2.0 will be built on up to 64 blockchains (Ethereum is currently a single blockchain), the Beacon Chain is the first step towards a new proof-of-stake-based chain that will coordinate the rest of the chains. It was launched in December 2020 and has, as of today, almost 9 million ETH deposited on it.
The Merge is known as the point at which the Beacon Chain and the current Ethereum network will start working together, making the Ethereum network operate under Proof-of-Stake. The Merge is expected to take place during the first quarter of 2022 if the Kintsugi network tests are successful. This time is known as Ethereum 1.5.
The final phase of Ethereum 2.0 is the implementation of sharding, a possible solution to the high network fees being experienced on the Ethereum network. The fact that up to 64 coordinated chains can coexist under the Beacon Chain will reduce the load on the Ethereum core network, making the entire network more scalable and cheaper to use.
The transition to Ethereum Network 2.0 is a long and delicate path, but thanks to the community and the focus on different updates, the final user will be able to enjoy the network and its new possibilities without hardly noticing that anything has happened, as no specific action is required from the user during the whole process.
When everything will be completed, the community will be able to make use of a network that is much more scalable, cheaper and with much more potential. For example, anyone will be able to run an Ethereum 2.0 node on their mobile phone, something that has been impossible until now.