What are the latest changes in Ethereum 2.0?

Crypto Valley Live (ID: cryptovalley)

, Author: Alex Koma, translation: Li Hanbo, reproduced by Odaily with authorization.

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Ethereum 2.0 is an upgrade of the Ethereum network that is expected to take place by the end of 2020.

Once launched, Ethereum 2.0 will be a testnet for testing the Proof-of-Stake (PoS) consensus algorithm system. Most economic activities and smart contracts will continue to run on the original Ethereum network, which will continue to be a parallel system of Ethereum 2.0. The developer has realized the connection bridge for the transition from Eth1 to Eth2, but the reverse cannot be transferred back to Token.

What are the three phases of Ethereum 2.0 deployment?

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Phase 1: Fragmentation

Initially an experimental network with 64 shards will be deployed. In the absence of significant economic activity, Phase 0 aims to test the basic PoS infrastructure, while Phase 1 aims to test the basic sharding model. At this stage, 65 blockchains will be running in parallel - the beacon chain that existed at stage 0 and 64 new shards. There will also be a two-way communication and linking mechanism between the beacon chain and all 64 shards.

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Phase 2: Implementation of the new operating model

It is assumed that at this stage, smart contracts will start working on the network and economic activity will begin. Sharding will no longer be the storage of raw data, but will start to resemble virtual machines and Ethereum 1.0 smart contracts. The specifications for the second phase are under development.

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PoS（Proof of stake） 

After the launch of Ethereum 2.0, there will be two networks running in parallel - Eth1 and Eth2. Initially, Eth1 Token can be exchanged for Eth2 Token, but not vice versa, so in theory, the transaction price of Eth2 Token should be less than or equal to the value of Eth1 Token. However, in the early stages of the transition, Eth2 tokens are unlikely to be priced or supported by exchanges, as their only use will be staking. Even basic transfers will not be possible."To transfer Eth1 to Eth2, you need to use the Eth1 Escrow Protocol. This protocol will destroy the Token on Eth1, and then the destroyed Token can be used as confirmation for the issuance of new Eth2 Token. Token will be permanently destroyed, but due to protocol changes caused by hard forks, Token can be recycled."Tokens transferred to Eth2 will automatically enter the validator pool.

According to the concept of PoS, voting

Weights

The reward amount for the verifier and verifier is determined by the staked Token value. The Eth2 specification states that each validator must have 32 ETH. If the number of Tokens received in the contract exceeds 32ETH, the verifier will not be rewarded from these additional Tokens. If there are less than 32 ETH Token, the node will not be activated. Therefore, you need to transfer ETH to Eth2 in the ratio of 32 Tokens. Each part of 32 ETH can be a separate Staker.

Eth1 will continue to operate on the basis of PoW, and Eth2 will continue to operate on the basis of PoS.

During this period, both sets of validators, miners, and node candidates will be rewarded, so Ethereum's inflation rate will rise -- at least until the two systems merge.

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Source: BitMEX Research

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Data source: BitMEX Research

The following graph represents the inflation rate of Ethereum 2.0:

image description"Chart source: BitMEX Research"The issuance rate determines the amount of compensation. This reward is designed to incentivize users to convert tokens to Eth2. Since the success of Eth2 will reduce the demand for tokens, the rewards will be reduced proportionally. Such a model can ensure that the number of mobile tokens is sufficient to significantly increase the size of the network; however, if Eth2 is popular, then the issuance will not become too high.

If validators violate the rules, they will be fined and the confiscated tokens will be burned.

These mechanisms may cause a large number of Ethereum Tokens to be destroyed, which may suppress the impact of high inflation.

How will blockchain mergers work?

The next step may be the incorporation of consensus systems. Eth1 shards can gradually shift to PoS.

Proof-of-Work can continue to work, but after a given number of blocks—for example, after every 100 blocks—block consensus will determine Proof-of-Stake. Finally, it will be possible to abandon PoW altogether: PoW block rewards will become unnecessary. This will give ethereum users and investors more certainty about the inflation schedule.

What are the main technical features provided by website developers?

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Data source: GitHub

How will PoS (proof of stake) work in Ethereum 2.0?

PoS is a general concept of fork choice rules.

The chain with the majority of Token votes is preferred. Eth2's core voting system principles are the same as those in Ethereum's 2018 proposal, based on the idea of ​​Casper Friendly Finalty Gadget. However, the system has been updated based on the combination of Casper Friendly Finalty Gadget and the latest Message Driven Greedy Heaviest Observed Subree Fork selection rules (Casper FFG & LMD GHOST Fork selection rules).

The voting system engine consists of the following parts. First, a large fork pool, each representing a maximum of 32 ETH (32 ETH are required to activate a fork pool, this amount can be reduced to 16 ETH, which requires deactivation). This pool does not directly vote on blocks - it is divided into committees whose members are randomly selected from among the larger pool members.

The reason for dividing into committees is that not every staker can vote for every block - otherwise, the blockchain would contain too much voting data, which would make scaling impossible.

Additionally, committees allow you to collect voting data into controllable data registers. Therefore, in these committees, a group of Stakers is randomly selected to vote.

According to the Eth2 specification, the target number of Stakers per committee is 128 (the desired minimum number). The developers believe that this is a sufficiently large number of stakers to provide a possible block selection guarantee. Signatures can be combined to reduce the required block size and scale the network.

Committees are randomly selected by systems such as RanDAO. The random choice defines a passphrase that is appended whenever a block is proposed. To combat block sharding attacks, proposing a block has only two options that can affect this phase: propose a block or not. Therefore, the possibilities for manipulation are limited."In addition to the committee allocating stake, there is another subcategory of blocks and checkpoint blocks."There is a block checkpoint (checkpoint) in every 32 blocks, and the time interval between checkpoints is called an epoch (epoch). Within the boundaries of each epoch, there are 32 12-second time periods (intervals) in which blocks can be proposed.

Therefore, each epoch has 32 groups of slots for 32 committees. At the end of each epoch, members of the committee change positions. Each era has a committee (

ideal minimum

is 128 members). A committee member has the exclusive right to propose a block within a 12-second time interval, and other committee members can vote for a block. This voting is also known as a proof.

Assign Stakers to committees in the beacon chain (assuming one committee per slot):

Data source: BitMex Research

Each Staker is assigned to a committee. The more staked, the more committees. The maximum committee size is 2048, roughly equivalent to the entire Ethereum supply used per epoch (64 committees * 32 ETH * 32 slots * 2048 stakers per committee = 134.2 million ETH).

The graph below illustrates how the number of committees and the number of committee members change with the amount of ETH in the staking pool. It shows that as the staking pool grows, the number of committees first increases to 64, and then the size of the committee starts to grow when there are about 8.4 million ETH in the staking pool.

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Data source: BitMex Research

In order to determine which blocks have the most votes, it is necessary to add up all votes from all committees. If voters perform well, they can receive rewards from the newly issued Ethereum Token pool. If voters break the rules, they are fined and lose some of their stake. The purpose of the penalty is to prevent queuing behavior such as voting for two conflicting blocks, although this may be allowed in some cases. Stakers will be deprived of rewards for being offline.

How is finalization done in Ethereum 2.0?

When committee members vote on a block, they not only have to vote on a specific block proposal, they also have to reference and vote on a specific historical block checkpoint. It is this mechanism that ensures the stability of the voting process. Therefore, in fact, on the PoS model, there are two voting procedures, one inside and one outside. The diagram below illustrates how these two types of voting occur, and in which blocks these votes can be stored.

image description"confirm"。

If a checkpoint block is established on a block, and more than two-thirds of the committee members voted for the checkpoint, then the block can get"confirm"confirm

The earliest a block can be

The time is after two-thirds of the block is confirmed.

Normally, the process of confirming and finalizing a block in the beacon chain.

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Data source: BitMex Research

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• What are the penalties for violators of the rules?

• There are three situations in which voters are penalized.

Simultaneously commit two checkpoint blocks with conflicting links.

Cast two votes with overlapping links to checkpoint block transitions. For example, one marks the transition from checkpoint block 1 to checkpoint block 4, and from checkpoint block 1 to checkpoint block 4, and another one refers to the transition from checkpoint block 2 to checkpoint block 3.

It can be assumed that this rule will be replaced by a more reasonable rule, according to which all references to block transitions must be in order, however, it is possible for an honest node to skip a checkpoint block. The result could turn out to be legal. A graph illustrates the situation.

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Source: BitMex Research

How efficient is PoS in Ethereum 2.0?

Perhaps the entire process, including voting committees, indices of such committees, chaining of checkpoint block transitions, and the need to wait two epochs for block finalization, is an unnecessary abstraction that attempts to convert the voting system to the PoS model. Divide into components to complicate it. But the security model contains a fundamental flaw, that is, the problem of stake having no assets.

On the other hand, it is possible that such a process actually enhances the security of the network.

A multi-component process -- for example, the cycle of staking -- which makes it difficult for users who decide to change their stake to change the rules.

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In the first phase, shards are added to the system. The original plan was to start with 1024 shards, but this number has now been reduced to 64. The beacon chain is still considered the main chain, but now also contains shard references. Since there are 64 shards and each beacon block can be associated with 64 shards, it is assumed that in normal operation each beacon block can be associated with each shard.

There is a two-way linking mechanism - shard blocks refer to beacon blocks (have hashes of those blocks), and beacon blocks can refer to shard blocks (cross-reference). Some shards may not be referenced by beacon blocks, but every shard block must reference a beacon chain.

Block structure in Ethereum's sharding system (two shards shown).

image description"Image credit: BitMex Research"The blue arrow represents the hash value of the block, which must be included in every block. Gray arrows represent cross-referenced shards that are not necessarily included in the beacon block, as shown on the right side of the figure.

In the first phase, the sharding system and the staking process become intertwined. The validator committees for slots starting from phase 0 are displayed in shards. Each shard has its own voting selection committee, which votes on each

Committee period

Likewise, in the beacon chain, one committee member is assigned the task of producing a block within a specified time period, while other committee members vote on each proposal during that time period. The key factor is that when the beacon chain references the shard blockchain through a cross-reference system, all voting data is included in the beacon chain.

In the first phase, stakes are distributed randomly — either on the beacon chain or in specific shards. If the stake contains less than 8.4 million ETH, there is not enough collateral to fully serve all shards, so the work of the shards may be slowed down somewhat.

The figure below shows one possibility: Staker committees are allocated by shards.

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Figure: BitMex Research

This allows the Beacon Chain to have only one validator committee per slot. However, each shard blockchain contains the hash of the last beacon block, and each beacon block can contain voting data (cross-referenced) for all shards.

• Therefore, all votes and stakes on the sharded blockchains can also be used to calculate the rules for selecting forks and finalizing the main beacon chain. The PoS system works the same as before, except that instead of voting data in the committee directory (index), the beacon chain includes voting data for each shard.

• There are no checkpoint blocks within the individual sharded blockchains, and no confirmation or finalization process. To make sure the transaction is done inside the shard, you need to wait for the beacon chain. Once the actual blocks in the Beacon Chain are finalized, users can verify that the transaction was made in the shard.

• Therefore, cross-linking makes:

Count the voting power of the shard blockchain committee to the voting power of the main beacon chain.

Finalize and validate shard blockchain blocks.

The mechanisms required for this have not yet been fully developed. They may become in demand as the second phase begins.

The sharding framework allows a node to be managed with a flexible quality - capable of handling everything, including the beacon chain and each shard. Only the beacon chain can be managed, which includes the heads of the individual shard chains.

There is a third possibility - the nodes controlling the validation of the beacon chain and selected shards. If a user chooses not to manage the nodes that process each shard, he must rely on other users to verify the authenticity of the processes in those shards. However, it is very likely that some users will choose to validate these shards, thereby providing assurance.

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Ethereum holders tend to try new complex systems - DAO, Maker, DeFi.

Some ethereum community members are concerned that ethereum technology has been around for 5 years, but it is still lagging behind, so they think new technology is needed.

Ethereum 2.0 fills the community's need for new ideas, and it can be expected to generate substantial funding and stake rewards (possibly billions of dollars in ETH).

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In the short term, a large amount of ETH Token may be locked in the beacon chain, because users will be attracted by the opportunity to make money by packaging new blocks. Therefore, the stock of ETH in the market may shrink and the price may increase. On the other hand, ETH may simply be sucked in from other contracts where they are considered blocked. For Ethereum 2.0 to be a catalyst for long-term token price growth, not only should the stock not be constrained, but the generated demand is necessary.

For the Ethereum 2.0 network to be successful, the PoS and sharding system must function and be attractive enough to attract economically meaningful components of the Ethereum ecosystem.

Smart contracts and DeFi systems will have to choose a shard that works for them, and invest in upgrading their technology to be compatible with the constraints of the sharding system.