Tracing the Evolution of Ethereum from ETH 1.0 to ETH 2.0 and Beyond

Tracing the Evolution of Ethereum from ETH 1.0 to ETH 2.0 and Beyond

Introduction

The vision to create Ethereum was born out of the desire to create a simple blockchain, or, as Vitalik described it, "a blockchain with a built-in Turing-complete programming language, allowing users to build any kind of applications on top."
However, from its inception, the Ethereum blockchain has witnessed incredible adoption. With over 1200 protocols on Ethereum at the time of writing, it is clear that a simple blockchain won't just cut it. Hence, a more scalable approach has been adopted by the Ethereum founders and community to introduce gradual system upgrades that are dedicated to enhancing system scalability, security, and data storage.

Over time, the Ethereum ecosystem has outgrown the initial vision, and we've seen Ethereum's metamorphosis into a lot of things, including Etherscan, Etherex, Augur, MyEtherWallet, and more. Aside from these related protocols, we can follow the growth progression of the Ethereum blockchain from its launch in 2015 to its upcoming parallel chain structure (sharding).

Ethereum Merge: From Proof-of-Work to Proof-of-Stake

Two leading challenges that Ethereum has to resolve following its inception are gas fees and system congestion. Back in 2017, the Ethereum blockchain was highly adopted by projects during the ICO phase, which led to increase in number of transactions submitted for execution, high gas fee and slow transaction speed. To resolve this, Ethereum first introduced the Byzantium hard fork to reduce the reward for mining Ethereum blocks from 5 ETH to 3 ETH per block. This was followed by the Instanbul and Constantinople upgrades (2019), which were used to reduce transaction fees while enhancing system resiliency.
The move from Proof-of-Work to Proof-of-Stake commenced with the introduction of an Ethereum Staking Mechanism through the Beacon Chain in 2020. With this, validators were required to stake a minimum of 32 ETH ($ETH) to participate in securing the network. It is essential to note that the Beacon Chain was not merely for Ethereum staking; it also laid the groundwork for sharding.
Finally, the famous Ethereum Merge happened in 2022, when Ethereum successfully combined the Ethereum Layer 1.0 with the beacon chain to form a single network secured by stakers.

This move led to two notable development:

  • Moving from from mining to staking makes Ethereum an energy-efficient blockchain by reducing its carbon footprint by 99.95%.
  • It introduces a more sustainable and secure ecosystem maintained through staking, incentives, and slashing.

Ethereum Scalability: Layer-2, State Channel and Sharding

While blockchain security is of utmost importance, it should be noted that the issue of scalability has not been left hanging in the Ethereum ecosystem. Solutions like layer-2 blockchains, state channels, and sharding were introduced to resolve that. Optimistic rollups and Zero Knowledge rollups adopted rollup technology to  aggregate transactions off-chain and send bulk transactions to the main chain. Doing this, the Layer-2 chains reduce the number of transactions handled by Ethereum to ensure efficiency. Highly adopted Layer-2 blockchains include, ZkSync, Arbitrum, Optimism, and Base.
State channel is another Layer-2 solution used to reduce direct interaction with the Ethereum blockchain. Like the rollup technology, it also processes transactions off the main chain to reduce congestion. However, it is considered a more suitable option for decentralized applications that require instantaneous transaction completion.
On this list is sharding, one of the most anticipated upgrades on Ethereum's roadmap that sets the ecosystem for an enhanced level of scalability while ensuring optimal system security and interoperability. Sharding involves breaking the Ethereum blockchain into smaller parallel chains called shards. Though each shard will perform tasks independently, they all remain a part of a single ecosystem.

See also: Optimistic Rollups v zk Rollups

These scalability approaches have resulted in the following:

  • Low gas fees for transaction.
  • Considerable reduction in system congestion.

Ethereum Payment

Though Ethereum remains the most expensive blockchain to transact in the crypto space, the truth is that an attempt to reduce gas fees has gone through several upgrades and achieved considerable results. Among some of the approaches adopted is the London Hard Fork introduced in 2021, where EIP-1559 was introduced to reduce transaction fees and even enhance the value of Ether ($ETH).

This upgrade specifically achieved two things:

  • It introduces a fee-burning mechanism where a portion of $ETH earned as a transaction fee is burned.
  • It also eliminates the chance of gas fee manipulation by ensuring that fees become more predictable.

Conclusion

Essentially, this gradual development shows that Ethereum has grown beyond being a simplified leading blockchain in the DeFi space. Additionally, Layer-2 blockchains introduced an extensive solution to building dApps while retaining the security of Layer-1. These blockchains ensure that decentralized apps are secured while facilitating fast and efficient transactions. Chainnodes provides developers with a chance to interact with these blockchains seamlessly through its nodes and JSON RPC. Start with the free Core Package here.