The Impact of Ethereum 2.0

In early 2021, Ethereum crossed more than 1 billion transactions, hosting many of the biggest advancements and applications for decentralized business operations. To this day, it is the most used blockchain ecosystem, powered by the second-largest crypto asset by market capitalization. However, this huge transaction volume has undermined latency, delaying transactions and increasing their costs.

To ensure broader scalability, the Ethereum foundation has started a very ambitious upgrade (seven years in the making), to improve the infrastructure so it can service global financial industries: Ethereum 2.0.

Ethereum 2.0 aims to improve three main aspects of the Ethereum network; security, decentralization, and scalability. They proposed two main changes, implementing “Proof of Stake” instead of “Proof of work” and applying “sharding” as a scaling solution.

What exactly are these critical improvements planned with Ethereum 2.0?

(i) security, increasing the cost of attacking the blockchain, and ensuring that, in the extremely rare case of getting attacked, the coordination of a new chain that gets rid of the attacker gets done easily;

(ii) energy efficiency, addressing the rising criticism towards the energy consumption of the most-known blockchain -bitcoin-, the updates guarantee a secure, yet efficient energy usage. With PoS, validators are selected based on the amount of ETH that they have staked (deposited) in the…