What is Ethereum 2.0? What Does Merger Mean?

What is Ethereum 2.0? What Does Merger Mean?

The Ethereum Merge, formerly known as Ethereum 2.0, is a long-awaited major upgrade for the Ethereum network. This upgrade includes major changes such as shard chains, the Beacon Chain, and the Proof of Stake (PoS) consensus mechanism.

The Merge aims to enhance Ethereum’s security and scalability while improving transaction speed and reducing energy consumption. The upgrade process has been carefully planned and implemented in multiple phases.

This transformation has the potential to affect not only Ethereum itself but also the entire cryptocurrency ecosystem. As the largest blockchain network for smart contracts and decentralized applications, Ethereum’s transition could mark a turning point for many other projects in the industry.

Ethereum’s Background

The development of decentralized applications (dApps) has accelerated over the years. One of the projects that played a major role in this growth was Ethereum, which has revolutionized the industry since its launch. Today, when we think of innovation in the Decentralized Finance (DeFi) ecosystem, Ethereum is one of the first platforms that comes to mind, as it hosts the majority of these projects.

However, over time, certain issues have emerged within the Ethereum network. The increase in transaction volume led to network congestion and a rise in transaction fees (gas fees). This situation raised concerns about Ethereum’s long-term sustainability. To address these issues and make Ethereum more scalable, sustainable, and accessible, the Ethereum 2.0 upgrade was developed. Ethereum 2.0 aims to fundamentally change the blockchain’s structure and operation, impacting not only Ethereum itself but also all projects built within its ecosystem. This major transformation includes innovations that could reshape how the cryptocurrency market operates on a global scale.

What is Ethereum 2.0? Serenity and the Network Transformation

Source: Ethereum Foundation

Ethereum 2.0, also known as Serenity or Eth2, is a comprehensive upgrade to the Ethereum network. This upgrade aims to strengthen the network by improving key factors such as scalability, speed, and efficiency. However, it also seeks to maintain Ethereum’s decentralization and security while achieving these improvements.

The launch of Ethereum’s new version has been carefully planned for a long time. There has been a growing need to scale the blockchain in the most secure and decentralized way possible. Although the process can be complex, the innovations brought by Ethereum 2.0 aim to improve network usability and solve long-standing issues.

One of the most significant changes, the Merge, refers to Ethereum’s transition from the existing Proof of Work (PoW) system to the Proof of Stake (PoS) model. This is one of the most important upgrades in Ethereum’s history. Extensive testing has been conducted and bug bounties were offered to ensure a secure and smooth transition. Ethereum 2.0 will greatly enhance user experience and make the network more sustainable in the long term.

Ethereum and Ethereum 2.0: Proof of Stake (PoS) vs Proof of Work (PoW), Sharding, and the Beacon Chain

Ethereum and Ethereum 2.0 differ primarily in their use of Proof of Work (PoW), Proof of Stake (PoS), sharding, and the Beacon Chain. These concepts play a crucial role in understanding why the Merge is so significant.

Proof of Work (PoW) and Proof of Stake (PoS)

The Ethereum network initially operated using the Proof of Work (PoW) mechanism. In this system, crypto miners ensured network security and verified transactions by using computing power to solve mathematical problems, earning ETH as a reward. However, over time, this method became unsustainable. As the network expanded, the need for more mining power, high energy consumption, and environmental impact became limiting factors for the PoW model.

To address these issues, the Ethereum Foundation decided to transition to the Proof of Stake (PoS) model. In this model, transaction validation and network security depend not on mining power, but on validators who stake their holdings in the network. In the PoS system, users who stake at least 32 ETH can become validators, helping to secure the network while earning staking rewards. As a result, energy consumption is significantly reduced, while the network’s sustainability and scalability increase.

Sharding

Users who want to access the Ethereum network connect through a node. A node stores a complete copy of the network and processes all past transactions. This situation creates limitations in improving Ethereum’s transaction capacity.

Sharding is a solution developed to enhance Ethereum’s scalability. It works by dividing the blockchain into smaller pieces, allowing nodes to handle only specific sections. Thus, each node manages only a portion (shard) of the network instead of the entire chain. This significantly increases the network’s overall capacity, enabling transactions to be processed faster and more efficiently.

Beacon Chain

In Ethereum 2.0, shard chains operate in parallel simultaneously. However, these chains need to remain synchronized and operate cohesively. The Beacon Chain solves this issue by facilitating communication and data sharing between different shards.
The Beacon Chain is one of the core components of Ethereum 2.0. It enables shard chains to operate in coordination while establishing a central structure that enhances the network’s scalability. Without this chain, data sharing between shards would not be possible, and Ethereum’s goal of improving transaction capacity could not be achieved.
As one of the key building blocks of Ethereum 2.0, the Beacon Chain will significantly enhance scalability and ensure that Ethereum operates more efficiently in the future.

From Ethereum 2.0 to the Consensus Layer – Why Was This Change Made?

With the Ethereum 2.0 upgrade, not only technical changes took place, but also a significant transformation in terminology. The Ethereum Foundation adopted a new terminology system to better explain this upgrade process and prevent misunderstandings. In a blog post on the official website, the change was explained as follows:

• Eth1 → Execution Layer (Execution Layer)
• Eth2 → Consensus Layer (Consensus Layer)
• Execution Layer + Consensus Layer = Ethereum

This change was made to eliminate the misconception that Ethereum 2.0 is an entirely new system and to emphasize that it is an evolution of the existing network. Since Ethereum’s core purpose has evolved, the terminology was updated to align with this transformation. Abandoning the old naming helps users better understand Ethereum’s future and highlights that these upgrades represent far more than a simple version change.

The Impacts of the Ethereum 2.0 (Consensus Layer) Upgrade and Its Changes

The Ethereum 2.0 upgrade introduces significant improvements in scalability, security, and sustainability of the network. Users need to be aware of this transformation and adapt to the new Ethereum ecosystem.

With the update, the sharding mechanism will allow Ethereum to process more transactions per second. The blockchain will be divided into multiple parts through the Beacon Chain, and these parts will operate in parallel. Thus, each node will process only a portion of the network instead of the entire chain, increasing transaction speed.

As decentralization within the Ethereum network increases, blockchain security will also be strengthened. A more efficient network will help reduce transaction fees, making it more accessible for users.

One of the most significant impacts of this update will be the dramatic reduction in energy consumption. With the transition from the Proof of Work (PoW) system to the Proof of Stake (PoS) mechanism, the need for mining will be eliminated. This will reduce hardware consumption, minimize environmental impact, and make Ethereum a far more sustainable blockchain.

Conclusion

The transition of Ethereum from the Proof-of-Work (PoW) consensus mechanism to the Proof-of-Stake (PoS) system is eagerly anticipated by the Ethereum Foundation. This transformation represents a critical milestone not only for the Ethereum network but also for the future of cryptocurrencies and how blockchain projects will evolve. Over the years, numerous tests have been conducted on the network to ensure that this transition is implemented safely and successfully. The team is preparing to officially launch the upgrade while minimizing potential risks.

Overall, this Ethereum upgrade will not only enhance network efficiency and security but also become a benchmark for the entire cryptocurrency ecosystem. With its continuously evolving structure, Ethereum keeps shaping the future of blockchain technology.