How does ETH2 affect me or MyCrypto?
It is primarily a change in Ethereum’s infrastructure that is being upgraded. The ETH2 network will be completely compatible with the Ethereum network you are currently using, whether you use ether, MyCrypto, or the popular DeFi protocols. It will not result in a new token; the existing ETH will remain unchanged.
There is no doubt that Ethereum’s much anticipated network upgrade will be a success. In addition to the change from PoW to PoS, ETH2 will have shards and beacon chains and transition from PoW to PoS.
Ethereum is a busy, costly, and slow platform today. As of August, when the network was congested, if you sent an ether transaction with a gas limit of 21,000 and a gas price of 440 gwei, the transaction was likely to be mined within 30 minutes at a cost of $4.35.
You are interested in trying out the new DeFi protocol. Even if one was only interacting with smaller amounts, it would be virtually impossible to make it worthwhile since the transaction fees might exceed the price of the ether or tokens.
There are approximately 15 transactions per second on the Ethereum network right now, which is far too few considering the network’s increased demand. Furthermore, the current system of mining blocks and verifying transactions is not sustainable – it has been estimated that Ethereum consumes as much energy as Costa Rica in a year.
The Long-Term Objective of ETH2, originally called Serenity, is to rectify these issues. In multiple phases, this massive upgrade will increase blockchain scalability in a highly decentralized, safe manner, and will be delivered one by one.
ETH2: Proof of Stake
Proof of Stake (“PoS”), however, does not require a great amount of computing power to secure the network like PoW does. Staking means that one is devoting an amount of ether to become a validator on the network. Validators run a software client that will confirm and validate transactions and, if they are chosen, create new blocks on the blockchain. Whether or not a validator gets to verify a new block or transactions can depend on various factors, such as how long this client has been staking for and its wealth.
With PoS, anyone can partake in the network, as long as they have 32 ether. Even if they don’t have the required amount, it will still be possible to participate by using a pool, all while using consumer-grade computers.
How is it secure if computation power doesn’t matter as much?
In order to discourage attacks on the blockchain, validators can lose staked funds if they propose new, invalid transactions to compromise it. While slashing, the attacker will consume a great deal of ether – it is likely that their stake will be wiped out. Due to the fact that 32 Ether is the minimum stake amount, a failed attack would involve a considerable financial risk.
Often, an analogy is used to compare it to the current PoW system, that in case of a failed attack, the attacker will have to burn down the whole facility, to the point that they will only have to consume the much lower priced electricity needed.