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What is Ethereum 2.0 ?

Ethereum 2.0 is a long awaited set of upgrades to existing Ethereum network that is intended to make it much faster, less expensive, and increase it's scalability. As part of this upcoming upgrade, users can stake ETH token to secure the blockchain network. 

What is Ethereum 2.0 ?

Most of us aware that Ethereum is making a transition from proof of work (used by Bitcoin) based algorithm to proof of stake mechanism, used by coins like Cardano. This won't result in a fresh cryptocurrency instead your ETH token will be the same. Majority of the changes are going to happen at the backend system, technical improvements that we won't even notice.

In Ethereum 2.0, proof of stake is the big change we are going to see, because it rebuilds the crypto's environment perspective and economic structure for validating the blockchain. Ethereum’s existing network is based by a proof of work consensus algorithm, which is a well known method in the community. Proof of work mechanism is predominantly used in Bitcoin, Ethereum and Litecoin. In proof of work, miners solve complex mathematical problems using their mining rig.

The transition from proof of work to proof of stake is going to be extremely helpful for Ethereum network, not only in terms of energy efficiency. PoW uses a large quantity of power. A single payment on ETH 1.0 ends up using more power than a normal U.S. household does in a single day.

Ethereum 2.0 Staking

The PoS based system, includes validators putting their money will be given the right to add new blocks to the blockchain network, they need to stake up to 32 ETH that will be locked. With the PoW mechanism, new blocks are mined by people with high hash rate and expensive mining rig. But, in PoS blocks are usually delegated in a equal portion, based on how much crypto a person has staked up. So, if a person has staked 5% of the total will finish validating 5% of the latest blocks and receiving the reward. With Ethereum 2.0, validators are chosen at random.

Sygnum, a Switzerland based bank, will allow it's customers to stake their Ethereum on their system. This new staking method with the world’s first digital bank will offer a fully developed and user friendly UI for users who want to stake their Ethereum from their existing crypto wallets. The Ethereum you staked will remain in wallets, ensuring total security for users. The ETH 2.0 staking on Sygnum is not the first crypto to be staked, Sygnum also offers staking for Tezos.

The quantity of Ethereum being staked on the ETH 2.0 platform is rising. Recently this number crossed $6 million mark, with over 185,000 validators. The amount of ETH 2.0 being staked is equal to $14 billion in Ethereum. Staking seems to be getting a lot of popularity as it is a alternate method to earn interest on your crypto. JPMorgan’s analysts stated that staking will help as a source of revenue for investors. Experts predict that staking revenue to increase by 4x in coming years.

Ethereum 2.0 release date

Initially it was set for a release in 2019 , Eth 2.0's first phase was launched on December 2020. With two phases lined up for release, the full release is not yet decided to happen till 2022. 

The complete launch of Ethereum 2.0 is much anticipated change, especially after suffering so many delays. Despite these , the upgrade may happen earlier than we thought or get delayed again.

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