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The Ethereum protocol that launched in 2015 has had incredible success. But the Ethereum community always expected that a few key upgrades would be necessary to unlock Ethereum's full potential.
High demand is driving up transaction fees that make Ethereum expensive for the average user. The disk space needed to run an Ethereum client is growing at a fast rate. And the underlying proof-of-work consensus algorithm that keeps Ethereum secure and decentralized has a big environmental impact.
Ethereum has a set of upgrades that address these problems and more. This set of upgrades was originally called 'Serenity' and 'Eth2,' and they've been an active area of research and development since 2014.
Now that the technology is ready, these upgrades will re-architect Ethereum to make it more scalable, secure, and sustainable - to make life better for existing users and entice new ones. All while preserving Ethereum's core value of decentralization.
This means there's no on-switch for scalability. Improvements will ship incrementally over time.
Ethereum needs to reduce network congestion and improve speeds to better service a global user base.
Running a node is getting harder as the network grows. This will only get harder with efforts to scale the network.
A naive way to solve Ethereum's problems would be to make it more centralized. But decentralization is too important. It's decentralization that gives Ethereum neutrality, censorship resistance, openness, data ownership and near-unbreakable security.
Ethereum's vision is to be more scalable and secure, but also to remain decentralized. Achieving these 3 qualities is a problem known as the scalability trilemma.
Ethereum upgrades aim to solve the trilemma but there are significant challenges.
Press the buttons on the triangle to better understand the problems of decentralized scaling.
Ethereum needs to be able to handle more transactions per second without increasing the size of the nodes in the network. Nodes are vital network participants who store and run the blockchain. Increasing node size isn't practical because only those with powerful and expensive computers could do it. To scale, Ethereum needs more transactions per second, coupled with more nodes. More nodes means more security.
Sharding upgrades will spread the data storage requirements across the entire network, no longer requiring every node to hold 100% of the data. Although this doesn't directly address scaling the execution of transactions, this problem is being addressed directly by layer 2 rollup solutions.
Rollups need cheap storage on layer 1 though to be most effective. Sharding will give Ethereum room to breathe by maximizing the efficiency on rollups, enabling exponential improvements beyond the current 15-45 transactions per second limit. More on sharding
The planned upgrades improve Ethereum's security against coordinated attacks.
In proof-of-stake additional security comes from greater crypto-economic disincentives against attack. This is because, in proof-of-stake, the validators who secure the network must stake significant amounts of ETH into the protocol. If they try and attack the network, the protocol can automatically destroy their ETH. More on proof of stake
However, it is also important that upgrades that protect validators against denial-of-service attacks, enhance their anonymity, and separate block building and block propagation are implemented soon. These upgrades protect individual validators and the network as a whole against liveness attacks and censorship. More on proof-of-stake
Ethereum's security model also enables sharding. Validators who will be responsible for asserting that all data has been made available, but individual nodes will no longer be required to hold the entire history of the chain. A new role is also anticipated, known as a dedicated block builder, who will work alongside block proposers (validators) for efficient and safe block production
Staking also means you don't need to invest in elite hardware to participate directly in consensus. This should encourage more people to become a validator, increasing the network's decentralization and decreasing the attack surface area.
You can become a validator by staking your ETH. More on nodesStake ETH
Ethereum is a green blockchain with strong crypto-economic security.
Ethereum is now a green blockchain. The energy consumption was reduced by ~99.95% when proof-of-work was swapped for proof-of-stake. More on mining
Ethereum is now secured via staking, not computing power. More on staking
This sustainability boost also brings security benefits - staked ether makes it much more expensive to attack the chain than under proof-of-work, but less expensive to secure it as less new ETH has to be issued to pay validators than miners.
The move to proof-of-stake made Ethereum greener and more secure. It is a low-carbon platform for building apps and organizations.More on The Merge
The Beacon Chain brought staking to Ethereum and laid the groundwork for future upgrades. It coordinates the new proof-of-stake Ethereum.
Mainnet Ethereum merged with the proof-of-stake Beacon Chain, marking the end of energy-intensive mining.
Sharding will expand Ethereum's capacity to store data, and work harmoniously with L2s to scale throughput and reduce network fees. Sharding will be rolled out in multiple stages.