Talking about Ethereum 2.0: The entanglement between ETH and BETH

Editor's Note: This article comes fromUnitimes（ID：Uni-times）Editor's Note: This article comes from

, by TrustNodes, published with permission.

As the final preparations before the launch of Eth2.0 are being completed, including the deployment of the Deposit Contract and the public testnet will be launched soon, many people are eager to know whether the launch of Eth2.0 will bring two Cryptocurrency assets with different prices.

• We know that the first delivery of Eth2.0 is the beacon chain (beacon chain) using the PoS mechanism. The beacon chain is the main chain in the Eth2.0 system and will play the following important roles:

• Manage validators and their staked token assets;

• Form a validator committee for each shard chain during each epoch (including randomly selecting a block proposer and organizing committee other validators to vote on proposed blocks);

• Implement the PoS mechanism and reward or punish validators;
  

Facilitate cross-shard communication, etc.

Of course, the core role of the beacon chain can only be played after Eth2.0 completes the delivery of the shard chain (expected in 2021). But before the sharding structure is realized, Ethereum users can still participate in Eth2.0 Staking and get rewards through the beacon chain.

According to the current progress, the beacon chain will likely be delivered in the first quarter of 2020. But before the beacon chain starts, about 2 million ETHs need to be pledged in the system. This is where the collateral contract comes into play:

The Ethereum core team will deploy the mortgage contract on the current Eth1.0 old chain, and any Ethereum user can send ETH to the mortgage contract to become a validator in the beacon chain.

After the beacon chain verifies the ETH sent by the user, the mortgage contract will destroy the sent ETH from the current Eth1.0 old chain, and at the same time give the user the same number of tokens on the beacon chain, we might as well put the beacon This token on-chain is called BETH (or whatever).

Initially, the assets mortgaged by Eth2.0 verifiers in the beacon chain will not be transferred back to the current Eth1.0 chain, and this part of the mortgaged assets will be used to participate in the Staking of the beacon chain, which is equivalent to being locked in middle.

During the recent DevCon5 conference, some participants discussed the topic of exchanges providing liquidity for Eth2.0 tokens, that is, exchanges will need to decide whether to keep Eth2. Listed as a brand new encrypted asset BETH (or use another name).

The reason for this discussion is that when the beacon chain using the PoS mechanism is launched, the current Eth1. run concurrently for several years.

In the initial stage of the Eth2.0 system, PoW-based ETH tokens can be converted into PoS tokens, but PoS tokens cannot be converted back into PoW tokens.

Eth2.0 coordinator Danny Ryan said that this one-way bridging approach is more of a policy decision than a technical impossibility.

Danny said that if PoS tokens are allowed to be converted back into PoW tokens, this will slow down the development process of the entire Eth2.0, and technically "need to expose the state of the beacon chain to the 1.0 chain, and on the 1.0 and 2.0 chains." Added additional consensus rules to handle token reminting on the 1.0 chain and token burning on the 2.0 chain.”

That is to say, if you want to transfer the PoS tokens in the beacon chain back to the PoW tokens in the Eth1.0 chain, the way of switching back will be the same as the user converts PoW tokens into PoS tokens through the mortgage contract. Just in the opposite direction. If this two-wire bridge is implemented, then Ethereum's PoW tokens and PoS tokens are indistinguishable.

So, the exact situation is still unclear, but the exchange has options.

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List BETH tokens?

As far as the author understands, since the verifier seems to be able to send BETH to other verifiers after the beacon chain is launched, exchanges will be able to choose to list BETH token assets on the beacon chain.

It is unclear whether these BETH tokens can be sent to non-validator users who only have beacon chain accounts, or whether there will be non-validator accounts on the beacon chain in the first place.

This is because the beacon chain only acts as a "coordinator" to coordinate which shard chain the verifier (and its pledged tokens) should verify. But at the beginning, there was no shard chain in the Eth2.0 system, so there was no need to transfer BETH tokens between different shard chains. The beacon chain was just a clumsy blockchain at the beginning.

Why exchanges would need to list this BETH token before implementing shard chains is unclear. But obviously some users may not want to continue to mortgage their token assets after becoming a validator of the beacon chain, so they want to transfer their BETH tokens to others. This recipient may not have or do not want to pass the Send ETH tokens to the mortgage contract to become a beacon chain validator.

Also, you might think that the exchange will have to list two different Ethereum tokens, because obviously ETH and BETH are two different tokens, because the current ETH has gained a lot of user usage and support for many DeFi applications, And BETH is only used for staking.

If the exchange waits until the shard chain structure is implemented before listing BETH tokens, then arguably, they will still be two different tokens at that time, because ETH is a PoW token and BETH is a PoS token .

The extent to which the two tokens will differ will depend on how the associated wallets are implemented and what the associated addresses are.

If there were different address formats for the two tokens, it might give the impression that ETH and BETH exist on two different blockchain networks, and sending BETH tokens to a PoW address might feel like sending BETH tokens to a PoW address. Sending to a Bitcoin address is no different.

If so, the exchange may have no choice but to list two different Ethereum tokens, which is the only way to achieve a two-way connection between the tokens in the Eth1.0 chain and the Eth2.0 chain at both ends of the mortgage contract .

Otherwise, these two tokens are in different worlds, and there is no connection between them from the perspective of usability, until Eth1.0 is merged into a shard chain in Eth2.0, and ETH and BETH are merged accordingly .

So probably actually at first the exchange will have to list two different ethereum tokens until the two are merged together.

But this can be a bit of a hassle, mainly because what kind of token is ether? Both are, but not the same ether, at least for a while.

It is not easy to analyze the cryptoeconomic situation of Ethereum from the perspective of "two different Ethereum tokens will be listed on the exchange". This is because some of the ETH token supply on the Eth1. Contract will be destroyed and reduced, and at the same time, the supply of BETH tokens on the Eth2.0 chain will increase accordingly.

As the supply of ETH decreases, you might think that the price of ETH will increase, but this will only happen if the demand for ETH remains the same or increases. In fact, as some users switch to Eth2.0, their demand for ETH may drop, otherwise BETH will have no market foothold.

The Eth1.0 chain will continue to be the dominant chain for some time, as the Eth2.0 chain will basically start from the ground up to add users.

So it's both a migration and a separation like BTC/BCH but without cloning accounts, as every Ethereum-based business/service will eventually have to upgrade.

Eth1.0 and Eth2.0 are two different networks. Even when the Eth1.0 chain becomes a shard chain in the Eth2.0 chain, the infrastructure supporting ETH may lead to a different chain for a period of time. Perhaps that's why Vitalik Buterin initially said such a merger would be many years away.