In July 2015, Ethereum was born. Launched by Vitalik Buterin, this smart contract platform is now the second-largest cryptocurrency by market cap. With thousands of decentralized applications built on the network, Ethereum’s growth has been exponential over the last four years. As we move closer to the Ethereum upgrade, let’s take a look at a breakdown of Ethereum’s Serenity road map.
Why the need for an update?
Despite Ethereum’s success, it faces monumental scalability problems that pose a challenge for dApp developers on the platform. Ethereum was originally built on a PoW (proof-of-work) consensus algorithm, the same as Bitcoin. With the Serenity upgrade, Ethereum will move over to a PoS (proof-of-stake) algorithm, which will hopefully eliminate the scalability issues, and improve speed and security on the blockchain. For context, Visa currently processes around 45,000 transactions per second while Ethereum can only process 15.
Proof of Work vs Proof of Stake: Basic Mining Guide https://t.co/g4ZGSoqwr5 #Bitcoin #Ethereum pic.twitter.com/WsN9bu6ymC
— Blockgeeks (@Blockgks) July 4, 2017
The Serenity Update
Now let’s look at a breakdown of Ethereum’s Serenity road map.
The Ethereum Wiki outlines seven phases to the Serenity upgrade.
- Phase 0 – The Beacon Chain: The Beacon Chain is a PoS chain that will run parallel to Ethereum’s current PoW chain. At first, it will be engineered for simplicity and will not support smart contracts or accounts.
- Phase 1 – Basic Sharding: Sharding will help transactions scale by dividing the blockchain over multiple different shards. This will allow Ethereum to process many transactions at the same time.
- Phase 2 – eWASM: eWASM is basically a rebuild of the Ethereum Virtual Machine, that will support both sharding and proof-of-stake. This will introduce smart contracts, accounts and various other features to the Ethereum 2.0 blockchain.
- Phase 3 – Light client state protocol: In order to avoid offloading storage onto secondary markets, Ethereum 2.0 will give users the option of paying storage rent on the blockchain.
- Phase 4 – Cross-shard transactions
- Phase 5 – Tight coupling with main chain security
- Phase 6 – Super-quadratic or exponential sharding
The first three phases of the Ethereum upgrade will likely be implemented by 2021, while the remaining phases are still quite up in the air. It’s likely that they’ll be implemented over the next few years. According to Vitalik Buterin, “Ethereum 1.0 is a couple of people’s scrappy attempt to build the world computer; Ethereum 2.0 will actually be the world computer.”
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Why is this important for investors?
What’s really important for investors in Ethereum to know, is that the Serenity upgrade is a radical overhaul of the entire network. According to a report from Kyokan, the first three phases will likely take a year and a half to complete. Look at a breakdown of Ethereum’s Serenity road map, it’s clear that we’re not going to recognize Ethereum in the next few years. With so many changes planned, Ethereum as we know it will be a distant memory and what will replace it may be the greatest blockchain on the market. Who else is looking forward to the Ethereum upgrade?
