Ethereum opens the era of smart contracts
More than 10 years have passed since the birth of Bitcoin. Its emergence and development have also allowed us to see the power of the blockchain technology behind it. Although Bitcoin continues to be hit and criticized, it has survived tenaciously, and the global consensus it has gained has become wider and wider, especially in this round of bull market, not only has a large number of top global investment institutions entered , And some countries have begun to enter the market. For example, El Salvador has regarded Bitcoin as its own country’s legal currency. In addition to El Salvador, more and more countries support Bitcoin.
The reason why Bitcoin can survive tenaciously is related to the decentralization and anti-regulation characteristics of blockchain technology. Bitcoin confirmation and transaction confirmation are jointly completed by nodes scattered around the world. Each node was forced to shut down for some reason. This will not affect the overall operation of the Bitcoin network. Bitcoin shows us the power of a decentralized network.
Although Bitcoin’s global consensus is getting wider and wider, its positioning is basically centered on digital assets (called digital gold). Compared with traditional centralized assets, Bitcoin is a decentralized digital As a typical representative of assets, as long as you have the private key, no one or organization can confiscate or seize your Bitcoin. This is essentially different from centralized assets. As Teacher Li said: Bitcoin is the first time in human history. The sacred and inviolable private property was realized by technical means.
The emergence and development of Bitcoin has allowed more people to understand the blockchain and digital asset technology behind it. Bitcoin is the first and most successful application of blockchain technology, but the powerful blockchain technology is not only used For digital currency assets represented by Bitcoin, it has a wider range of uses. For example, the emergence of Ethereum, known as the “World Computer”, has once again witnessed the power of blockchain technology.
The emergence of Ethereum opened the era of smart contracts. Although both Ethereum and Bitcoin are typical applications of blockchain technology and are the products of the concept of decentralization, their positioning and development direction are completely different. It shows us the power and charm of decentralization from different directions.
A legal expert in digital assets (who was a partner of many law firms), a high-quality blue-collar investor (Sun Ming), an early investor in the blockchain, once said that if Bitcoin is positioned as “digital gold,” As the path of assets becomes more and more determined, then blockchains such as Ethereum try to provide new production relations, organizational forms and business models that surpass the company, and what is changing is the paradigm of social and economic operation.
In the era of smart contracts created by Ethereum, the server and the client can directly interact through smart contracts, which greatly reduces intermediate links, saves social operating costs, and improves operating efficiency. It optimizes social resources and improves production relations. , And rebuilt the trust mechanism, reduced the cost of trust, and transformed from the traditional model of trust between people to the model of trust in machines. It allows users to conduct trustworthy, trustworthy, Traceable transactions.
The emergence of Ethereum is epoch-making, and the development of Ethereum will show us the huge application space of blockchain technology.
Ethereum’s ecological explosion
Looking at the two recent big bull markets, they are basically closely related to Ethereum. It can even be said that it was started by Ethereum. The big bull market in 2017 was detonated by 1C0, and the big bull market started in 2020 is Detonated by DeFi, whether it is 1C0 or DeFi, they all started and exploded from Ethereum, and even the current popular track NFT was the first to start with Ethereum.
In the Ethereum ecosystem, many high-quality projects started from 1C0 in 2017. 1C0 has changed the traditional funding model. Of course, it is inevitably full of scams. Technology is a double-edged sword. Ethereum is a neutral technology. It has greatly expanded its application boundary. Project parties can issue tokens and conduct fast financing through Ethereum’s 1C0, so that they have sufficient funds to develop their own projects, and individual investors can also enjoy the benefits of project development.
Although 1C0 was later banned by many countries, it did enrich the Ethereum ecosystem to some extent. At present, many classic ETH DeFi applications were developed through the incubation of 1C0 that year.
With the continuous development of Ethereum, its application scope has become wider and wider. Different types of DApps in various industries have begun to appear on Ethereum. The DeFi that broke out last year has made Ethereum once again attract the attention of the market.
To some extent, the explosion of decentralized financial DeFi is inevitable. After all, blockchain technology and finance are inherently related, and blockchain technology is also easier to land in the financial field. The current classic DeFi applications such as Uniswap, Compound, MakerDAO, AAVE, Synthetix, etc., were all born in Ethereum, and then on the basis of these classic DeFi applications, many derivative DeFi applications were born. The better the ecological development, the more complete the infrastructure, so it will More DeFi applications have appeared, thus entering a state of virtuous circle.
Ethereum has greatly promoted the large-scale implementation of blockchain technology applications through DeFi , and more practical DeFi has begun to appear on Ethereum. For example, people in some poor countries in Africa, they don’t even have a bank account and have been suffering from inflation for many years. However, they can use DeFi applications to reduce the impact of inflation, reduce the impact of currency devaluation, and increase their own earnings. DeFi will definitely affect the future financial landscape.
In addition to DeFi, the current popular NFT also started from Ethereum. It started from the crypto cat game that appeared on Ethereum in 2017. In addition to the popular tracks of DeFi and NFT, DApps for decentralized applications in more fields have chosen to be built and run on Ethereum, and decentralized applications on Ethereum are getting closer and closer to our lives.
The main problems currently facing Ethereum
Although Ethereum has made tremendous development, the inherent performance defects of Ethereum are becoming more and more obvious. For example, its TPS is very low, and it can only process more than 10 transactions in one second, and a centralized payment network. Compared with Visa, PayPal and credit cards, there is still a magnitude gap, and the ETH GAS fee is very high. These factors are not conducive to the large-scale implementation of blockchain technology applications.
I remember that the CryptoKitties application in those days was very popular, and only one CryptoKitty application slowed down the entire Ethereum network. Since the outbreak of DeFi last year, it has encountered network congestion again. Because DeFi applications are too popular, sometimes the Ethereum network transfer fee can even reach hundreds of US dollars. Not only is the GAS fee high, but also there is a lot of confirmation on the Ethereum network. Transactions are queuing, and a transfer transaction can sometimes even take a day’s waiting time.
On the one hand, the Ethereum ecosystem has exploded, and a large number of DeFi, NFT and other DApp applications are running on the Ethereum blockchain at the same time. On the other hand, the problems of Ethereum network congestion, high GAS fees, and slow transaction speed have been Unresolved, the performance defects of the Ethereum network have become an obstacle to the sustainable development of the ecosystem.
In order to solve the performance bottleneck encountered by the Ethereum blockchain network, Eth2 was born.
The main content of Eth2 upgrade
For a non-technical ETH holder, it is still difficult to understand the content of the Eth2 upgrade, but at least we can find out by understanding the two flagship functions of Eth2.
Two flagship functions of Eth2: PoS consensus mechanism and sharding.
(1) Two flagship functions of Eth2
1. PoS consensus mechanism
The current performance of the Ethereum blockchain is relatively low. A big reason is that it uses the PoW consensus mechanism like the Bitcoin network. In order to fundamentally improve the performance of the Ethereum network, a fundamental improvement in the Eth2 upgrade is consensus. The mechanism shifted from PoW to PoS.
In Eth2’s PoS consensus mechanism, if you want to become a validator, you need to pledge 32 ETH to the system, which means you can become a validator of Eth2 by holding 32 ETH, and the Ethereum network randomly selects validators from the validator pool. The selected validator will have the opportunity to create the next block, and the validator will receive a certain ETH reward for participating in the block production of the Ethereum network.
Of course, the Ethereum validator has a reward and punishment mechanism with clear rewards and punishments . The validator can get ETH rewards for participating in the block production, but if the validator is not online for a long time or even maliciously prevents the normal block production, the validator will be punished by the corresponding slash. The pledged ETH will be partially fined and may even lose all 32 ETH pledged.
From the above picture (data source: https://beaconscan.com/slots-slashed), it can be seen that 146 slashes have occurred. The reasons for being slashed include Attestation Violation and Proposer Violation.
The block reward and punishment mechanism of the validator of the Ethereum network guarantees the safe block generation of the Ethereum network to a certain extent.
With the increasing influence of Bitcoin in the world, the blockchain network of the PoW consensus mechanism represented by Bitcoin and Ethereum has been criticized by people more and more. Bitcoin, Ethereum, etc. consume more and more power resources, and the calls for banning are also increasing. For example, our country has taken strong measures to achieve the goal of carbon neutrality. A large number of PoW miners have been distributed in China. Has been forced to relocate overseas. Therefore, it is also the general trend that the consensus mechanism of Ethereum is shifting from PoW to PoS. PoS is becoming the mainstream consensus mechanism. Not only is it more energy-efficient, but more importantly, the performance of the blockchain network will be greatly improved so that it can carry A large number of decentralized applications.
Obviously, PoS still has many advantages over PoW.
First of all, compared with PoW, the PoS consensus mechanism consumes less resources and is more environmentally friendly. Compared with PoW, it requires the purchase of a large number of mining machines and consumes a large amount of resources. PoS can be run through an ordinary computer, and we can even use ourselves at home. Computer to run the PoS validator node.
Secondly, the PoS consensus mechanism is also safe. According to V God (https://www.chainnews.com/articles/627818205318.htm), if you want to successfully attack the Ethereum network, you basically need to have the amount of ETH pledged in the entire network to successfully attack Ethereum The funding threshold is still quite high.
For example, at the time of writing, the number of ETH pledged in the beacon chain is 5.93 million+, which means that if you want to successfully attack the Ethereum network, you need to have 5.93 million+ ETH in theory. According to the current ETH market price, The value of 59.30 million + ETH is 89 billion, which is not a small number. For the attacker, using these 89 billion funds to attack the Ethereum network is definitely not cost-effective in terms of economic benefits. Instead of attacking, it is better to find ways to add bricks to the Ethereum network and participate in the ecological construction of Ethereum. , So the benefits that can be obtained will be more.
In addition, PoS is easier to recover from an attack than PoW. In Eth2’s PoS consensus mechanism, there are many corresponding measures against attacks, such as an automatic “penalty” mechanism.
In Eth2’s upgrade plan, another major upgrade is sharding.
Sharding changes the blockchain structure, so that a single node in the Ethereum network only needs to store part of the data of the entire network and process some of the transactions, so that parallel processing can be realized, thereby increasing the number of transactions that can be processed at the same time, namely Can improve scalability.
Fragmentation technology is still more complicated, but we can simply use the analogy between single lane and multi-lane to assist in understanding fragmentation.
If Eth1 is a single-lane road, then Eth2 is upgraded to a multi-lane highway, where multiple vehicles can drive at the same time. The more lanes you add, the more vehicles that can drive at the same time, and the greater the throughput of the road. High, that is, the stronger the parallel processing capability.
We can also use supermarket checkout counters to assist in understanding. When there is only one checkout counter, you may need to queue for a long time to check out. If you increase to two, the theoretically speaking queue time will be reduced to half, if you increase to four Taiwan, the queuing time is reduced to a quarter of the original.
For the Ethereum network, when the sharding is completed, the entire Ethereum network will not be congested as before, and the performance of the Ethereum network will be greatly improved.
Through PoS and fragmentation, we can probably understand the main content of the Eth2 upgrade. Let’s take a look at the main stages of the Eth2 upgrade.
(2) Eth2 upgrade process
Eth2 upgrade can be divided into chronological order: beacon chain, merge and fragmentation.
1. The realization of the beacon chain was launched in December last year.
The beacon chain is an independent blockchain. It is mainly responsible for storing and managing the verifier’s registry, and it implements the Eth2 PoS consensus mechanism. The beacon chain only processes the consensus layer of the protocol, but its data and application layers are Empty , the beacon chain and the original Eth1 will work together to ensure data continuity, that is, Eth1 serves as the Ethereum execution layer, and the Eth2 beacon chain serves as the Ethereum PoS consensus layer.
At present, Eth2 is in the beacon chain stage. At this stage, users can pledge ETH to obtain income, but the pledge is one-way, that is, the ETH pledged at this stage cannot be redeemed, and it needs to wait until Eth2 opens the transfer function.
2. The merger is expected to be completed in 2021.
The merger refers to the complete upgrade of the current Ethereum mainnet, Eth1, from the PoW consensus mechanism to the PoS mechanism , and the complete end of the PoW consensus mechanism. Ethereum has officially become a PoS blockchain network from then on.
3. Sharding is expected to be completed in 2022.
The original plan was to deal with the shard chain before merging-to solve the scalability problem. However, with the vigorous development of the second-tier scaling solution, the priority has shifted to upgrading the proof of work (PoW) to proof of stake (PoS) through consolidation.
The main task at this stage is to implement sharding. The original proposal was to implement 64 shards. We can simply understand it as “decomposing” Ethereum into 64 different blockchains, so as to achieve parallel storage, transactions, and Information processing, etc. At this stage, there will be 65 blockchains running in parallel, namely the beacon chain and 64 shard chains, and there will be a communication mechanism between them.
According to V God’s description, although the original idea is 64 shard chains, it can theoretically reach 1024 shards. The more shards, the higher the performance, but at the same time it will also bring problems. More challenges, as for the final number of shards can be adjusted.
For the Eth2 upgrade, there is still a lot of work to be done after the merger. Ethereum founder V God once shared the roadmap after the merger at the ETHGlobal Merge summit. In order to have a deeper understanding of the main functions of Eth2, let’s simply Introduce the main content of the roadmap below.
(3) Eth2 follow-up planning
If PoS and sharding are to fundamentally improve the performance of the Ethereum network, then Rollup is a partial optimization and improvement of the Ethereum network.
The basic concept of Rollup is actually very easy to understand. Users send transactions to a central aggregator. The aggregator first processes the transaction data. For those data that has nothing to do with the update status , the aggregator will remove it, and then only Publish the data related to the update status and compress the data related to the update. After such processing, the amount of data finally published on the chain will be greatly reduced.
In addition, the calculation is moved from the chain to the chain, that is, the calculation will not be performed on the chain, but the calculation will be performed off the chain. For example, the hash value is calculated and generated off the chain, and then only the hash proof is submitted to the chain, so that calculations that require a lot of resources do not need to be performed on the chain.
To put it bluntly, Rollup is nothing more than reducing the amount of data submitted to the chain. Therefore, through the Rollup scheme, about 90% of the data that is not related to status updates, and possibly about 99% of the calculated data, are performed off-chain. Processed, and the data put on the chain, there are only about 10% of the data related to the status update and possibly 1% of the calculated data . After some such processing, the data that ultimately needs to be submitted to the chain is greatly reduced.
For the Ethereum network, the parallel processing of PoS and sharding has greatly improved the performance of the Ethereum network. Coupled with the further compression of transaction data by Rollup, the performance of Ethereum will be greatly improved. The problems of network congestion and high GAS fees will be resolved.
2. Safety improvement
First, add privacy features.
As we all know, the data on the blockchain is open and transparent, and cannot be tampered with or deleted. All transactions can be queried on the blockchain browser. Although the threshold of trust is lowered, it also brings a series of problems. For example, it is obviously inappropriate for confidential data related to personal or corporate privacy to be published on the blockchain. Although the blockchain brings openness and transparency, privacy and security also need to be considered. At present, many blockchains are already in Improve privacy and security related issues.
As the forerunner and leader of the public chain of Ethereum, Eth2 has also optimized and improved privacy and security, such as hiding the identity of the validator of the block proposal .
Second, support VDF to ensure the randomness of assigning validators, making it more difficult for perpetrators to disrupt the network. VDF is called Verifiable Delay Function (Verifiable Delay Function), we can understand it as a solution related to random numbers.
Of course, there is still a lot of work to be done after the merger, and it is not limited to Rollup and the improvement of security, such as cleanup after the merger, solving the Ethereum state explosion and even defending against quantum attacks.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/public-chain-leader-eth2-on/
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