While Ethereum has brought a new realm of possibilities due to its native Ether token (ETH) and its smart contract and tokenization capabilities, it often faces challenges such as network congestion, relatively low transaction and performance times, large blockchain size, and excessive use of electricity for mining – all problems that Bitcoin Freedom also shares.
While Bitcoin (BTC) was created by an anonymous developer who left the network to be developed by his capable community, Ethereum always envisioned itself with a roadmap and a team behind it. While the plan has been subject to change and delay, Ethereum has always intended to implement certain measures to combat all of the issues mentioned above, just as the developer community has done with Bitcoin and updates like Segregated Witness.
Ethereum was created in several stages, many of which have been implemented, but Serenity, or Ethereum 2.0, is particularly important to the network and the community because it will bring about some of the most important changes, including the testing of participation and shaping updates. With the use of the Ethereum network falling largely into the ecosystem of decentralized applications and decentralized finance, many are wondering what will happen to the DeFi ecosystem when the Ethereum 2.0 update is implemented.
What is Ethereum 2.0?
Ethereum 2.0 will be launched in the second half of 2020, after its announcement in 2018 and delays in the launch in 2019 and 2020. The first stage is currently known as „Phase 0“ and will see the launch of Beacon Chain, the chain of blocks in which the first iteration of the Ethereum PoS consensus model will be implemented. The second stage, „Phase 1“, will bring the implementation of shard chains that are compatible with each other and can be used simultaneously.
While these two stages will build the foundation of Ethereum 2.0 and the solutions to the congestion and scalability problems that Ethereum currently faces, these two stages will coexist with the current block chain, and the two will only be merged in the third stage, „Phase 1.5“. Ethereum will coexist with 63 other block chains, with the mentioned Beacon Chain eliminating the need to exchange tokens for those who wish to remain in the original chain during the implementation of Ethereum 2.0.
Once Ethereum 1.0 is „merged“ with Ethereum 2.0, the blockchain history will remain, and Ethereum 2.0 will be considered „complete“ when Phase 2 and beyond is launched, which is expected to happen by 2021. Until then, the working test consensus model will continue to be supported and developed to ensure a stable foundation for DApps and DeFi before the leap from a single-string PoW protocol to a multi-string PoS system.