Ethereum may begin transitioning to its next-generation, proof-of-stake blockchain model at the beginning of next year – pending more tests, that is.
A new proposal by founder of ethereum Vitalik Buterin suggests a new paradigm for decentralized application deployment on ethereum 2.0.
Ethereum co-founder Joseph Lubin has made the claim that his currency will achieve an exponential increase in scalability over the coming years.
Speaking in an interview with CoinTelegraph, Lubin stated that ETH scalability–the most prominent issue to be addressed in the massive Ethereum 2.0 overhaul–will improve by 1,000 times in the next 18 to 24 months. Lubin highlighted the Ethereum 2.0 update, also codenamed Serenity, as the primary driver for the increase in scalability.
Despite the growing landscape for cryptocurrency, the majority of top coin projects such as Ethereum and Bitcoin still suffer from an inability to scale to levels necessary for mainstream adoption. ETH, in particular, is facing an issue of handling the load of mercantile transactions, in addition to other network features such as smart contracts and DApp developments. Ethereum 2.0 seeks to solve the issue of scalability–among a number of proposed solutions–by switching the currency from its historic Proof of Work algorithm to Proof of Stake. Through staking, the currency will utilize the resources of users pledging “staked” coins in order to improve the user experience and efficiency of the overall Ethereum network.
Lubin gave further updates on the development timeline for Ethereum 2.0, sharing his belief that the project will have an operational testnet in the coming months, with a Phase 0 launch to follow before the end of the year,
“In a small number of months, we should have a fully operational testnet and possibly, by the end of this year we’ll have a fully operational phase 0 Ethereum 2.0.”
The co-founder’s time-table for Ethereum 2.0 stands in stark contrast to comments made by Messari CEO Ryan Selkis, who claimed last week that the update would take much longer than what ETH devs are predicting. Rather than being completed by the end of next calendar year, Selkis predicted that Ethereum 2.0 would not be fully operational until 2021 at the earliest,
“I don’t expect Proof of Stake and Ethereum 2.0 to happen before the end of 2021 at the earliest.”
Lubin did shed some light on how Ethereum developers are planning to manage the currency’s transition without implementing a hard fork, which has been the traditional approach to massive coin overhauls. Rather than forking the blockchain into multiple currencies, Lubin claims that the new chain could be merged with the old, allowing tokens to move through “bidirectional mechanisms” onto the Proof of Stake platform.
Ethereum’s co-founder also defended the security of Proof of Stake, debating another point that was raised by Selkis. While Proof of Work has been rigorously tested as the algorithm of Bitcoin and other major cryptocurrencies, Proof of Stake has yet to be implemented on a similar level of scale. Lubin stated that PoS was thoroughly researched by teams prior to ETH devs making the decision to transition away from PoW, and claims that Etherum 2.0 will be adding new features to the blockchain to make it more compatible than previous iterations.
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Prysmatic Labs co-founder Preston Van Loon announced the launch of an Ethereum 2.0 Proof of Stake (PoS) blockchain Testnet on May 7.
While the full transition for Ethereum away from its current Proof of Work algorithm to a Proof of Stake blockchain is still over a year away, the testnet launch by Prysmatic labs represents a positive development for the currency. According to Van Loon in an update published to Medium,
“It’s here it’s here! Over the past months we’ve been preparing extensively, working every single day to deliver a public testnet for Ethereum 2.0’s proof of stake beacon chain to the community. We have it, it’s live, and you can stake! This is a non-trivial, critical step to take this technology to the next level, and we need you to be a part of it.”
As opposed to most cryptocurrency overhauls, which involve the creation of two currencies in following a hard fork of the blockchain, Ethereum 2.0 is being developed as a transition for the existing cryptocurrency. While there are a number of features that will be rolled out in updates over the next sixteenth months, Proof of Stake is being billed as the solution to ETH’s scalability issues. In addition, the algorithmic shift will make Ethereum 2.0 more secure and decentralized, while allowing users to stake their coins to improve the overall network experience.
In return for “staking” coins in their Ethereum wallet, users will receive a dividend similar to the interest paid on a savings account. However, while the PoS transition is being hailed as a monumental development for the second ranked currency by market capitalization, not everyone believes 2.0 will launch as smoothly as expected.
Speaking on a conference panel earlier in the week, Messari CEO Ryan Selkis predicted that the Ethereum 2.0 launch would not occur until 2021 at the earliest, compared to the 2020 timetable given by ETH core developers. Selkis claimed that Proof of Stake integration would lead to delays, and believes the currency is fine operating for the next several years under its well-tested Proof of Work algorithm.
Prysmatic Labs’ launch of an Ethereum 2.0 testnet, while currently limited, gives a vote of confidence in the overall transition to Proof of Stake. The update posted to Medium highlights sharding as a major development for Ethereum moving forward, which function as individual chains managing smart contracts, transactions and more.
Van Loon explained,
“A core concept of Ethereum 2.0 is the idea of shards, which are individual chains that manage smart contracts, transactions, and state. These shards are coordinated by one root chain, known as the beacon chain, which is what phase 0 of Ethereum 2.0 implements. Having shards allows for horizontal scalability of the system, as transactions can be processed in parallel compared to the current Ethereum proof of work chain.”
Prysmatic reports that the present version of the testnet is fully accessible to the public, and is not a simulation of the blockchain. Users are free to participate in maintain the network and deposit ETH into a deposit contract for staking or run a validator client. The full list of features and instructions for joining the officially live network can be found here.
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The CEO of crypto analytics firm Messari is predicting that the Proof of Stake (PoS) transition for Ethereum will be later than what the current time table for the currency is indicating.
While Ethereum devs in February announced the intention to transition away from a Proof of Work (PoW) blockchain to Proof of Stake within the next eighteen months, occuring before the end of 2020, Messari’s CEO Ryan Selkis thinks ETH users will have to wait another calendar year.
Selkis made his prediction during a panel hosted by ConsenSys’ Ethereal Summit on May 10. The panel, which was titled “The Smart Contract War is Coming”–in reference the growing competition between Ethereum and other network-based cryptocurrencies–Selkis explained that Ethereum is likely to face major risks in transitioning away from PoW to a PoS algorithm. While Selkis does not believe the task to be insurmountable, he does find the original eighteenth-month time table to be unrealistic, giving his prediction that the transition would not occur until 2021 at the earliest.
Selkis also claimed that Proof of Stake systems are “not proven to work,” at least in their current iteration. Compared to the glut of cryptocurrencies operating under Proof of Work, which has provided a tried and tested method for blockchain algorithm, Proof of Stake is relatively undemonstrated.
Messari’s CEO went on to given his opinion of Ethereum’s current algorithm, claiming that the existing Proof of Work System is, “probably pretty good and maybe even good enough,” and that PoW will continue to be an acceptable market standard for the next several years. Proof of Stake, on the other hand, will likely take more time and resources to develop than what the market is currently anticipating.
“I don’t expect Proof of Stake and Ethereum 2.0 to happen before the end of 2021 at the earliest.”
While Ethereum is planning major updates over the coming month as apart of the development into what is being called Ethereum 2.0, the Proof of Stake transition is shaping up to be one of the largest endeavors in all of cryptocurrency. If properly implemented, Ethereum will represent the largest currency to operate under a PoS algorithm, and provide greater separation between itself and industry-leading PoW currency Bitcoin.
With Proof of Stake, Ethereum looks to improve upon the efficiency of transactions and network operations, in addition to integrating a system of staking that will be novel to most cryptocurrency users. Similar to receiving interest on bank account, Ethereum coins kept in a wallet and ‘staked’ will allow users to earn a dividend. Investors may benefit from a small amount of interest through staking, but the overall network is the real benefactor of staking, which functions to improve the efficiency of transactions and other features.
Compared to Proof of Work, PoS will ultimately allow Ethereum to function in a more energy efficient manner, in addition to expanding the capability for network scalability–an issue that the majority of coins on the market are facing as a limitation to wide-scale adoption.
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The new miners of ethereum 2.0 are expected to make a small but positive profit for creating new blocks and validating transactions on the network.
Wire protocols are not often spoken about when discussing blockchain development. It being an essential aspect for blockchain development, certain ethereum developers have gone ahead and created one for basic testing purposes.
Ethereum Foundation researcher Justin Drake affirmed that plans to finalize code for ethereum’s proof-of-stake blockchain were on track for June 30.
Ethereum researchers are currently discussing the optimal reward issuance rates for a new version of the network called ethereum 2.0.
Ethereum developers are aggregating efforts to implement ethereum 1x – a new proposed upgrade intended to act as the intermediary bridge to ethereum 2.0.