Ethereum 2.0 is having its biggest update up to date on 1st December 2020. Ethereum has been planning this upgrade since it launched in 2015. This upgrade will be implemented in multiple phases, and the phase 0 will launch just in few days at the time of this post. The phase 0 doesn’t mean much and wont affect correct Ethereum ecosystem/network at all. But it is a big step in the future of finally launching ETH 2.0. It is really big change for us miners. As much as I love mining ETH, because of this upgrade we wont be available to mine Eth in next 2 years as we are used to with GPUs and mining hardware. So what ETH 2.0 really means , I will try to explain this in my own words and how I understand it.
1.Whats is Ethereum 2.0 and how it will affect us miners
There will be implemented 2 biggest changes, which are planned to improve and increase Ethereum transaction amount. Biggest challenges what Ethereum currently is facing is the scalability. Network hasn’t been used more then ever currently. The issue is there is only limited amount of transactions can be executed . Because of this everyone is fighting for the block space on Ethereum and this is why transactions getting more and more expensive. So the ETH 2.0 will try to solve this issue by the upgrades which is changing Consensus algorithm and implementing sharing.
Consensus algorithm – currently Ethereum is running on POW which is mining as we know it using our hardware to secure the network and transactions. In ETH 2.0 the Consensus algorithm will be changed to POS, which is staking. So you wont need anymore hardware but you will need software running + 32ETH. This is how much will cost your mining rig. The idea between POW and POS is very similar you need capital to mine Ethereum, only thing POS should be more energy efficient. As in POW there is a lot of energy been used to secure the network.
The biggest downside what I see on ETH 2.0 Proof of stake , is that to have validator(mining rig). You will need 32 ETH which at the current price is 17000usd. This is quite lot, as onboarding on POW is lot more cheaper. But this is also tricky question as seen many projects are trying to implement staking pools. Which basically means people putting money together to gather 32Eth which is enough for Validator.
Sharding – it is and upgrade to improve network efficiency. So how I understand this, You have a country and in the country to make it more efficient you have multiple states. Same thing here where ETH 2.0 is the country ,which is responsible for all the shards(states). Shards will be the states to make it more efficient. For example one shard for Exchanges other for lending/borrowing…etc. This way you can scale the transaction amount done on Ethereum network.
2.When we can Expect Ethereum 2.0
Ethereum 2.0 phase 0 is launching in 1st December 2020. Phase 0 is just a beacon-chain , which will be used for testing purposes currently only. To launch beacon chain we needed to put minimum 524000 ETH into smart contract with one way ticket a week before ETH 2.0 can be launched. This has currently happened and ETH has secured to launch ETH 2.0 on 1st December. So it is happening you want it or not. If you want to be part of the ETH 2.0 chain this is the website where you will deposit 32 ETH into ETH 2.0. Depositing your Ethereum in this smart contract is one way ticket currently and you wont be available to withdraw your ETH until ETH 2.0 is fully launched. This might be not for everyone, as there is a lot of risk involved if you only expecting for Ethereum price increase.
3.How Ethereum 2.0 will be launched.
Ethereum 2.0 will be launched in multiple phase. Phase 0 which is launched on 1st December. Phase 1, phase 1.5 and phase 2 which should be fully functional ETH 2.0. Where ETH 2.0 will be the main chain and the current ETH chain will be implemented as one of the shards.
4.What requirements need to have ETH 2.0 Validator
You will need 32 ETH to launch full validator for ETH 2.0 , this will bring you staking rewards. You wont be available to withdraw your 32 ETH until the ETH 2.0 fully will be launched, which is expected in 2 years from now.
5.where to setup ETH 2.0 validator
ETH 2.0 deposit can be done trough https://launchpad.ethereum.org/
This is only one step. You will also need to run software for this validator 24/7. Be aware that if you wont be running the software 24/7 you will be penalized/slashing. Your amount of ETH from your validator will be lost forever. So this is lot more different then currently running mining rig or running validator on ETH 2.0 . It your mining rig is offline currently you don’t loose anything , but if ETH 2.0 is offline there is amount deducted from your 32 Ethereum coins.
6.My thoughts about ETH 2.0 upgrade
As much as I love mining and don’t want ETH 2.0 to happen just because I wont be available to use my GPUs for mining ETH anymore. It will be very sad to see ETH mining finish as we have all used to it. I will miss ETH mining very much as I have spent last of my 5 years in it. It helped me to understand and learn a lot about Ethereum and blockchains. Also I use Ethereum network very often for day to day transactions. Interacting with smart contracts. Lending, borrowing liquidity mining and trading. And I know how painful is to pay crazy high transaction fees. So if this fixes Ethereum scaling issues and it will be lot cheaper to use. Let it be, I’m very big Ethereum supporter and I want this project to succeed. And be the financial network which has started financial revolution. I believe that we will have very soon new financial system and the current will be history. I do understand this, by using Ethereum for day to day transactions. I feel this is more efficient, you can interact with financial instrument without any 3rd parties.