Ethereum, the second most valuable blockchain network in the global market, will see its biggest upgrade ever soon. Chromatic Capital managing director Grant Hummer says if successfully implemented, it will create major improvements that would make the so-called “ETH 2.0” significantly better than the current version.
For many years, the Ethereum developer community has tried to implement second-layer solutions and make a big pivot to the proof-of-stake (PoS) consensus algorithm.
Unlike the proof-of-work (PoW) algorithm, which requires miners to mine blocks to process transactions like with bitcoin and Ethereum’s current version, PoS do not need the presence of miners to settle transactions.
The next phase of Ethereum and the key upgrade revolves around PoS, which Hummer said would allow the network to process tens of thousands of transactions rather than 10 to 15.
Future is bright for Ethereum says fund manager
Throughout the past two years, many pieces of software have been tested and developed by the open source Ethereum developer community.
Solutions like Plasma, Sharding, and others that allow second-layer transactions settlement have been long in the works.
However, as said by Hummer, it has been difficult for the Ethereum network to see rapid progress with scaling and the implementation of solutions, mostly because of the network’s size.
For smaller blockchain networks with lesser developers, users, and entities working on top of it, it is generally easier to reach consensus and quickly adopt changes.
“This has caused many to write Ethereum off as a failed experiment. Their pessimism is understandable. Ethereum today (ETH1) is slow; the entire network is throttled at 15 transactions per second (TPS), and doing anything complex at scale with those transactions is extremely costly,” he explained.
This also means that many developers, companies, and users are present on the Ethereum network, and the network effect has allowed it to maintain dominance over the smart contract space.
“From my vantage point, the future looks bright for Ethereum. There are no other smart contract blockchains with anywhere near the critical mass of researchers, developers, users and projects that Ethereum has, and there’s no better time to get involved.
Ethereum is on the cusp of the biggest and most important upgrade it will probably ever undergo, an upgrade that, if successfully implemented, will create massive amounts of value for the world.”
If Ethereum 2.0—which some describe as a completely different protocol compared to the first version—is successfully launched, it will alleviate significant pressure off of decentralized applications (DApps) and newly emerging decentralized finance (DeFi) applications in processing on-chain transactions.
Keep an eye on the first three updates
According to Hummer, who also runs the San Francisco Ethereum Developers Meetup, the first three updates in the entire process of implementing ETH 2.0 are the most crucial.
“ETH2’s launch is divided into multiple phases, but the most important are the first three. These phases are rolling out the various components of ETH2 in a staggered manner, both because they take a long time to build properly and because introducing changes in a gradual manner greatly reduces technical risk,” he said.
It would be the first major progress Ethereum would see since initially deciding to take the route of building towards ETH 2.0 years ago.