What is Ethereum 2.0’s new blockchain version? | by CointradeIndia | May, 2023

Ethereum is a new blockchain version with deduced methods to update its network. In mid-September 2022, an update called “Ethereum Merge” was launched. That update is also referred to as Ethereum 2.0, which allows Ethereum to enable new applications and scale its transactions to reduce cost by driving greater utility on-chain.

Let’s move directly into knowing more about Ethereum.

What is Ethereum 2.0?

The transition from Ethereum 1.0 to 2.0 is not at all a random event. The main aim of this project is to make the blockchain network more accessible, cheaper, faster, more effective, and more secure.

Ethereum 2.0 staking upgrade heralded the consensus mechanism of Ethereum from the PoW (Proof-of-Work) model to PoS (Proof-of-Stake).

Here are some of the benefits of Ethereum 2.0 –

More eco-friendly and less computation power:

The proof-of-stake (PoS), which Ethereum employs, does not call for high-end computing power to solve complex problems, as does the proof-of-work (PoW) model. This makes it environmentally friendly as one PoW transaction is expected to use as much energy as the typical American home uses in a week.

Increased efficiency and scalability:

Ethereum 2.0 can process 100,000 transactions per second, compared to Ethereum 1.0’s
almost 25 to 30 transactions per second. The Sharding approach makes it possible for this improved scalability. Sharding makes Ethereum faster than the previous blockchain version, according to reports, by allowing it to store and retrieve data as well as use “Shard Chains” for transactions.

Making ETH a deflationary asset:

The merging would substantially limit the amount of ether distributed as block rewards. Around 13,000 ETH are purportedly mined each day. The merging would result in a daily decrease to 1,600 ETH. All of which would guarantee that there are fewer coins in circulation, decreasing the inflationary nature of ETH.

High-security level:

In order to enable a decentralized network and secure the blockchain by minimizing the attack surface area, Ethereum 2.0 requires a minimum of 16,384 validators. This guards against a network-wide 51% assault.

More network participation:

More people can take part in Ethereum 2.0 if the hardware requirements are reduced. Validators don’t have to store data by themselves when utilizing Sharding. Instead, they might use data approaches to verify that the network has made the data usable. Also, more people can participate in the staking process if they have 32 ETH to lock in, which also helps in boosting network activity.

Here are some of the risks that are associated with Ethereum 2.0 –

Possible scams:

Some crypto-related businesses go under the name “ETH 2,” pretending that ETH (Ether) was what was updated to Ethereum 2.0. This attempts to trick users into exchanging their ETH for the fictitious ETH 2.

Feasible drop in ETH value:

The value of ETH and other cryptocurrencies based on the Ethereum blockchain could decrease if things go wrong after the integration.

Conclusion:

The main goal of an updated Ethereum network (Ethereum 2.0) is to make it faster and more secure while maintaining accessibility. Expectations are high among specialists in the field and amateurs due to the switch from the PoW methodology to the PoS model and the introduction of Sharding. The merger has a profound effect on the DeFi market. The final outcome will only become clear with time.