Ethereum 2.0

As Ethereum is transitioning from its current state to Ethereum 2.0, there have been lots of doubts and questions about its future. Is it going to die? Or is it going to revolutionize the blockchain industry one more time? In this article, we summarize, what’s in place for Ethereum 2.0

Design Goals

Ethereum has identified 5 distinct design goals for its 2.0 version:

  • Decentralization: A typical consumer laptop should be able to process any system-level validation
  • Resilience: The Ethereum network should remain Live, as the major network partitions happen and nodes go offline during the transition
  • Security: Utilize Best in Class crypto and design techniques that allow for a large participation of validators in total and per unit time
  • Simplicity: Minimize complexity, increase the user-friendliness
  • Longevity: All components should be either quantum secure or can be easily swapped out for quantum secure counterparts when available


Phase 0 – Beacon Chain

Beacon Chain is the first component of Ethereum 2.0. It is the foundation of the entire system. The Beacon Chain will manage the Casper Proof of Stake protocol for itself and all of the shard chains. Different aspects of Beacon Chain include

  • Managing validators and their stakes
  • Nominating the chosen block proposer for each shard at each step
  • Organizing validators into committees to vote on the proposed blocks
  • Applying the consensus rules
  • Applying rewards and penalties to validators
  • Being an anchor point on which the shards register their states to facilitate cross-shard transactions
  • Beacon Chain will use Friendly Finality Gadget (FFG). This will make the operation immutable.

Stakers will be able to vote for a shard block which will, in turn, apply for a beacon block. This process is called ‘attestation’. A sufficient number of attestations for the same shard block will create a “crosslink”. Crosslinks confirm the shard segment up to that shard block into the Beacon Chain.

ETH2: The New Ether

ETH2 will be the new asset that stakers (validators) will use on the Beacon Chain. It will be created using two methods:

  • As a reward for validating the Beacon Chain
  • Purchasing it for 1 ETH by any ETH1.x user via a registration contract. An ETH1.x validator registration contract will effectively burn the deposited ETH1.x. Beacon Chain validators watch this contract and submit deposit information to the Beacon Chain, which then issues ETH2 to the depositors.

Beacon Chain will use RANDAO to generate distributed, verifiable, unpredictable, and (reasonably) unbiased randomness for the rest of the system. RANDAO combines contributions provided by many participants into a single output number. Beacon Chain will use this to organize validators into block proposers and committees.

2 active Ethereum chains
  • Once Phase 0 is complete, there will be two active Ethereum chains
    • ETH1 chain (current, PoW main chain) and
    • ETH2 chain (new Beacon Chain).
  • During Phase 0, all user transactions and smart contract computations will still occur on the ETH1 chain.
  • ETH2 is transferable to and from shards once Phase 2 is complete. To become a validator, one will need to stake 32 ETH2.

In order to run the Beacon Chain, one needs a Beacon Chain client. This is currently in the development phase.


Phase 1 – Shard Chains

Shard chains allow parallel transaction throughput. Ethereum will deploy 64 shard chains in Phase 1 (with the option of adding more over time). The focus will remain on the construction, validity, and consensus on the data of these shard chains. Phase 1 is the sharding structure’s trial run. Go live timelines of these shard chains are not clear yet. The Beacon Chain will treat shard chain blocks as simple collections of bits with no structure or meaning.

Cross-shard communication differs on ETH2 as it is not synchronous. Shards lose composability in between themselves. Hence, a dApp will have to choose what shard it wants to be on. A dApp needs large data to consume all the resources in a given shard to justify spreading itself over multiple ones.


Crosslinks are a set of signatures from a committee attesting to a block in a shard chain, which can be included in the Beacon Chain. The Beacon Chain “learns about” the updated state of shard chains through crosslinks.

Shard validators are randomly selected by the Beacon Chain for each shard at each slot. They come to an agreement on each block’s content. They attest to the shard’s contents and state through crosslinking. All committees then reach consensus and update the Beacon Chain on the shard regularly.

In Phase 0, 1, and 2 rewards will be paid to both Ethereum 2.0 validators as well as the normal PoW block rewards. Therefore, the combined inflation of the two chains may spike initially. It is estimated to trend towards the 0-1% range as the PoW chain is gradually de-emphasized.


Phase 2 – State Execution

In Phase 2 the functionality of the entire system will start to come together.

  • Shard chains transition from simple data containers to a structured chain state
  • Reintroduce Smart Contracts
  • Each shard will manage a virtual machine based on eWASM.
  • It will support accounts, contracts, state, and other abstractions.
  • It will introduce the concept of ‘Execution Environments (EEs)’. Developers can construct EEs within a shard in whatever way they see fit. Every shard has access to all execution environments and has the ability to make transactions within them as well as run and interact with smart contracts.



The Ethereum Roadmap is filled with technological advancements and talks less about marketing and adoption. Ethereum does not need immediate marketing. You can not sell a product which is half-built. We trust Ethereum and trust their courage to accept the change needed to make them great again.


This article has been summarized from the Ethereum 2.0 Road Map


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