Ethereum 2.0 (Eth2) is being pegged as the blockchain Messiah of Ethereum. Newsflash: it’s not. The long-awaited changes are not expected to solve core issues that are plaguing the network and forestalling wider adoption.
Vitalik Buterin, the brilliant mastermind behind the Ethereum blockchain, considers the personnel working with Ethereum as a bigger problem than the actual software, as he stated in a recent interview with Forkast news. While the personnel working on the project may or may not be problematic, it’s surely not the only shortcoming. As promising as the new rollout may seem, the kind of software upgrades set to be introduced will not solve the long-term problems plaguing the network from reaching the heights Buterin and his disciples once envisioned.
The major problems
Ethereum currently runs on a proof-of-work (PoW) system that enables only up to 15 transactions per second or so — double that of the Bitcoin (BTC) blockchain — and is widely considered as impractical for building any expansive decentralized finance, or DeFi, ecosystem. As a result, gas fees are incredibly high on Ethereum. Because so few transactions can be processed per second, the price to process faster becomes competitive. Research by Dune Analytics shows that 2-5% of transactions on Ethereum-based decentralized exchanges (DEXs) failed due to complications such as insufficient gas prices.
Another core issue the Ethereum platform faces, but often disregards, is poor user experience (UX) design. As a result, the average users who may be interested in engaging with decentralized finance applications (DApp) or a nonfungible token (NFT) marketplace, for example, will avoid doing so because most user interfaces are not only not intuitive, but also lack sufficient educational resources to give users the know-how to use the platform.
Users are expected to set transaction fees in gas price and gas limits for transaction processing. Yet, how many users realistically know this without going down the intense rabbit hole of cryptocurrency jargon and information? Insider Intelligence reported that 25% of United States adults don’t understand or know how to invest in digital currencies. How could users be expected to know without access to effective educational tools, for example, that sending payment from two separate wallets to the same receiving address would not cause a nonces conflict? In all likelihood, the vast majority of regular users would not be aware in the slightest of such a problem to begin with.
To respond to these long-standing issues, Ethereum’s overseers announced the launch of Eth2 as a series of upgrades over its existing model, which would include switching to proof-of-stake (PoS) and sharding. The proof-of-stake concept states that people can mine blocks and validate transactions according to how many coins they hold. The Ethereum Foundation announced that it expects the switch to PoS to be completed by the end of 2021. As the Ethereum Foundation explained in a recent blog post, “the energy requirements remain unchanged” compared with the old PoW system.
Sharding is expected to take much longer and, according to Ethereum’s website, “shard chains could ship sometime in 2022 depending on how quickly work progresses” after the current Ethereum mainnet merges together with the Beacon Chain proof-of-stake system. Sharding is the process of splitting a database horizontally in order to spread the load, reducing network congestion and increasing transactions per second. The shard chains are expected to give Ethereum more capacity to store and access data.
The new upgrades are designed to…