“Ethereum 2.0” (ETH2) Explained

Everything You Need to Know About ETH2

Ethereum 2.0 (ETH) is a term used to describe a series of planned updates to Ethereum to make it more scalable, secure, and sustainable.[1][2][3]

ETH2 (or ETH 2.0) includes updates to address current scaling issues, issues with mining, and issues with security. These include proof-of-stake solutions (Beacon Chain, Casper), Sharding solutions, and more.

Each of the noted solutions either addresses scaling (AKA it makes transactions faster and thus creates a better environment for smart contracts and DApps), changes the way Ethereum is mined, and/or helps make the network more secure.

The result will be a better, faster, and more secure ETH, with a goal of having cheaper fees, faster transactions, and staking. In general, the average person won’t have to do anything for any phase of this upgrade and aside from some specific cases on exchanges, you do not need to do anything with any ETH you’re already holding to have ETH2 (it isn’t an airdrop or new coin, it is an upgrade to the current ETH blockchain).

The best news is, here in July 2021, Ethereum 2.0 is already starting to ship. For example, ETH2 staking began after Beacon Chain was shipped Dec 1, 2020. Make sure to check out your exchange for ETH2 staking options.

Staking ETH2: Most users won’t need to do anything for the upgrade. However, those who want to can stake to earn ETH and help secure the network once staking goes live.

Slashing Fees: ETH2 has both rewards and penalties. You get ETH for validating the network, but you also can have your ETH burned if network rules are broken. Make sure to check out Coinbase staking (and other exchange staking) and general staking services to help avoid slashing fees while earning ETH!

Burned ETH: Since the London upgrade, the base fee included with each transaction has been burned. Check out how many ETH have been burned so far.

ETH2 UPDATE August 2021: ETH staking has already begun. Meanwhile, the latest “London” upgrade, which included EIP-1559, is live!

ETH2 Phases and the ETH Roadmap

The implementation of these solutions is broken into phases.

The ETH2 roadmap looks like this:

TIP: As we move forward in time some of these planned phases will be implemented. For example, Beacon chain shipped Dec 1 2021.

Ethereum’s launch was initially planned to be in four stages back when it launched in 2015: 1, Frontier: The initial build at launch, 2. Homestead: The build that took us into 2018, 3. Metropolis: the current phase (a two-part phase consisting of two hard forks, Byzantium and Constantinople), and 4. Serenity: the final stage that takes us to “Ethereum 2.0” in three phases from 2019 – 2021 (timeline subject to change). Being worked on alongside this is Plasma, Raiden, and some other “layer 2” solutions (which you can consider to be part of Ethereum 2.0 or not).

We are now in Serenity, currently in Phase 0.

TIP: ETH2 will use a hybrid chain solution, where one chain is proof-of-stake and the other is minable by PoW mining. The Ethereum you know today will be useable on both chains and the chains will be interoperable. There will only be one ETH, and users and dapps shouldn’t notice a change (aside from faster and cheaper transactions).

ETHEREUM 2.0 – A GAME CHANGER? Proof Of Stake, The Beacon Chain, Sharding, Docking Explained.

Semantics: ETH2 has gotten a few name changes over time. The Ethereum foundation has seemed to settle on ETH2, so let’s go with that. ETH2 is basically the long-planned Serenity update.

Devcon 4 Keynote by Vitalik Buterin (about Serenity). See the 20 minute mark.

Ethereum 2.0 Solutions

Here is a description of each basic solution Ethereum is working on to upgrade the network, not everything noted below will necessarily make it into the final ETH2, but these were all things being tried along the way or that will be used:

  • Proof-of-Stake (PoS) solutions like Beacon and Casper refer to switching how Ethereum is mined. This addresses how the system is secured and how new coins are created.
  • Sharding in general is splitting a large database into smaller more manageable parts, same general concept for the Ethereum network. This addresses issues of scalability and transaction speed and stops one app from slowing down the network.
  • Casper a staking solution that forces validators to lock up tokens that they can only get back if they act honestly (it helps secure the network).
  • eWASM allows code to execute faster among other things. It expands coding options and capabilities for the Ethereum Virtual Machine.
  • Plasma is an extra layer that sits on top of the network that can handle massive amounts of transactions. It is the Ethereum version of Bitcoin’s Lightning Network.
  • Raiden is an off-chain scaling solution, like Plasma. Thus, this is also an Ethereum answer to the Lightning Network.
  • A bunch of things I didn’t specifically mention. There are a lot of ideas floating around and ideas that have already been implemented, including some system-wide upgrades that are part of the current phase of the Ethereum roadmap called Metropolis, and versions of the ideas on this page and important features contained within them. So keep in mind there is a lot more being worked on than the major items I’ve mentioned.
  • … also zk-snarks (a “zero-knowledge proofs” technology created for zcash) might be used as a temporary scaling solution in the meantime.

Ethereum 1.0 Problems

The above updates, some of which involve some code change that would need to be accepted by the community and in many cases exist as additional layers that sit on top of the existing network (or in the case of Serenity, simply a wholly new chain that exists alongside the current chain), are important because they address some fundamental and current problems with Ethereum.

Problems include:

  1. Scalability. The ability of Ethereum to be a world computer that handles financial transactions and hosts smart contracts and DApps without being unusably slow. Right now that is a problem. All the solutions above aside the proof-of-stake ones address this. <—- scalability is hands down Ethereum’s #1 sticking point right now.
  2. A solution for the difficulty bomb. There is a built-in rule that forces developers to switch from proof-of-work mining to proof-of-stake over time by slowing down mining rewards by increasing difficulty. The lack of a solution is hanging over Ethereum’s head.
  3. Security. Security isn’t the main problem with Ethereum, but there are aspects of security that stand to be improved and it’s one of the things being worked on.


If there is one legitimate non-price-based reason that Ethereum prices are struggling here in 2018, it is the need to address Ethereum’s current sticking points and show it can compete with other newer networks and newly upgraded coins (many of which are now faster than Ethereum).

Every aspect of “Ethereum 2.0” offers an answer to the above problems… and it reminds us that the future is bright since Ethereum 3.0, 4.0, etc are possible for the future (meaning as technology evolves, Ethereum can evolve too; the initial launch might have been planned in 4 stages, but there is no rule that says development ends there).

The point being, Ethereum has had some issues it needs to address, but years of work are starting to coalesce into a solution to these problems that one might call Ethereum 2.0 (i.e. the phase after Serenity and other such solutions are fully implemented).

For more reading, seeEthereum 2.0 — Who’s building it?

Article Citations
  1. ETH2. Ethereum.org.
  2. Ethereum 2.0 — Who’s building it? Medium.com.
  3. What is Ethereum Metropolis: The Ultimate Guide. BlockGeeks.com.

Author: Thomas DeMichele

Thomas DeMichele has been working in the cryptocurrency information space since 2015 when CryptocurrencyFacts.com was created. He has contributed to MakerDAO, Alpha Bot (the number one crypto bot on Discord),...