1.What's in an Ethereum upgrade?

PoS (Proof of Stake) : PoS is an upgraded version of PoW that improves security, scalability, and energy efficiency. Unlike PoW, which relies on miners and electricity, PoS relies on validators (virtual miners) and deposits of ETH tokens to build new blocks.

Shard chain: Shard chain is a scalability mechanism that greatly improves the throughput of the Ethereum blockchain and is more energy efficient. The shard chain "decomposes" Ethereum by distributing the task of data processing among many nodes.

2.The difference before and after the Ethereum upgrade

The existing Ethereum uses the consensus mechanism of proof of work (PoW), and the Ethereum upgrade will use the proof of pledge (PoS) mechanism. The following are the advantages and disadvantages of PoW and PoS:

Before the Ethereum upgrade, the network could only support about 30 transactions per second, causing delays and congestion. While Ethereum promised a maximum of 100,000 transactions per second after the upgrade, the upgrade is a very later thing, Layer2 may also exist as a fragment, speed increase or fragment implementation.

3.What has changed since the Ethereum upgrade? What is the impact on the existing Ethereum network?

The Ethereum upgrade will improve the scalability, throughput and security of the Ethereum mainnet. Ethereum mergers and upgrades do not erase any historical data, transaction history, or asset ownership on the existing PoW chain. After the upgrade, the original chain will continue to operate and improve until it is upgraded to an upgraded Ethereum shard chain.

4.When will the Ethereum upgrade go live?

In fact, the merger is not an easy task, from the beginning of the plan to complete 2021, but has been delayed several times, which is why it is so important.

In recent years, in addition to protocol development, a detail shift began last year when many Ethereum developers, including God V, began to use the "implementation layer" and "consensus layer", trying to avoid saying "Ethereum 2.0" and "Ethereum 1.0".

5.Ethereum upgrade logic

After understanding the entire historical process of Ethereum upgrade, we will introduce the entire planning and progress of Ethereum in PoS in detail (but because the whole planning is too broad and difficult to develop, it has caused intermittent delays in the plan). Understanding the planning and modules of the entire Ethereum network upgrade helps us to understand the overall blockchain network development trend, but also to discover some potential opportunities and new needs arising from the various stages of the Ethereum upgrade.

Ethereum is made up of a set of upgrades that improve the scalability, security and sustainability of the network. Although each is working in parallel, they have certain dependencies that determine when to deploy them. In general, Ethereum upgrades work in three groups: The Beacon Chain, The Merge, and the Shard Chains. (The official page was last updated on June 3, 2022)

1. Beacon Chain ~ December 1, 2020:

The beacon chain won't change anything about Ethereum that we use today.

It will coordinate the network as a consensus layer;

It introduces proof of stake to the Ethereum ecosystem;

At the time, it was called "Phase 0" on the technology roadmap.

The beacon chain will guide Ethereum into PoS, a new way to help secure Ethereum. Think of it as a public good that will pledge 32 ETH by the node verifier to activate the verifier software, participate in network consensus, and in the process earn more ETH for participating in network consensus and security, which has existed since creation as a chain independent of the mainnet (or "execution layer").

On the one hand, the pledgee does not need an energy-intensive computer to participate in the proof-of-stake system, just a home computer or smartphone. This will make Ethereum applicable to more environments, making it easier to pledge and become a verifier than to mine (the network's current secure way). On the other hand, in the long run, as more ETH is pledged, the network becomes stronger because it requires more ETH to control a large part of the network. To be a threat, you need to control most of the validators, which means you need to hold most of the ETH in the system (which is a lot), which will help make Ethereum more secure. The more people who participate in the network, the more decentralized and secure it becomes.

Therefore, in a PoS Staking staking network, the number of lockers, authentication nodes, and user friendliness will greatly promote the healthy development of the Ethereum network. As of June 30, the total number of pledged ETH was 13,610,817 and the total number of verifiers was 404,918, and the current interest rate is about 4.2%, and the number of pledged and verifiers in the network is still on an upward trend.

In terms of pledge mode, nodes and users can pledge in various ways: Solo home staking, Staking as a service, Pooled staking, or Centralized exchanges.

Separate pledge method: that is, pledge alone on the Ethereum network, without any intermediate proxy or intermediary, so all the agreement proceeds are owned by the individual. In principle, it is the most decentralized, but it is also the most difficult to operate: in addition to at least 32 ETH itself, it also needs a dedicated computer to execute the client and ensure the continuous operation of the node. The tools you need to do this are: an open source application that helps you become a pledgee; Node tools: Rocket Pool CLI, Stereum, Vouch + Dirk, Vouch + Dirk, eth docker, Ethereum on Arm, DAppNode; Key Generators: Ethdo, Wagyu Key Gen.

Pledge as a service approach: depositing your own 32 ETH into the verifier, but delegating the node operation to a third-party operator, the main purpose of which is to relieve yourself of the tedious work of operating hardware and operations. Currently supporting this business are Abyss Finance, BloxStaking, Allnodes, etc. They are also entrusting parties or partners in various third pledge projects.

Pooled staking: Due to its convenience and meeting the needs of ordinary users, pooled staking is also the most popular form of staking today, helping those who do not have or are unwilling to pledge 32 ETH. Many of these options include something called "Liquity Staking," which involves ERC-20 liquidity tokens pledging ETH on your behalf. Liquidity pledges make it easy for you to exit anytime, anywhere, and make pledges as simple as token exchanges. This option also allows users to keep their assets in their own Ethereum wallet, such as: Lido, Rocket Pool, StakeWise

Read more about Liquity Staking and how it works here:

https://medium.com/@ViaBTC_Capital/viabtc-capital-insight-liquid-staking-is-unleashing-the-assets-value-and-efficiency-3 de47f5a894d

However, in terms of the degree of decentralization and security, we still need to be vigilant about the centralized degree of risk of pledge service providers, Lido accounts for as high as 32.25% of the network penetration rate, centralized exchanges Coinbase, Kraken, Binance account for as high as 27.96%, and others fail to confirm the address account for 30%.

Reference information on https://pools.invis.cloud/, multiple clients pledge beacon can be checked on the chain to choose from a number of different client software, but most of them are running Prysm at present. It's great when Prysm is running without trouble, but if an error or attack occurs, all validators on the network will fall victim to Prysm, so concentrating validators on one client is a risk multiplier for both the individual validator and the whole Ethereum.

At the same time, according to ethsunshine.com data show that as far as the current development of Ethereum is concerned, the diversity of consensus clients and execution clients still needs to be improved, and the market share of unmanaged validators is not particularly high (nodes that rely on cloud hosting services will have a single point of failure or attack, which may affect multiple nodes at the same time). The market share of non-mining pool validators is still very low, accounting for only 30%. So there's still a lot of room for improvement and growth in terms of maintaining Ethereum's decentralized health. We can achieve this by constantly encouraging individual pledge methods, or by choosing decentralized pledge pools and decentralized pledge pools as far as possible in the pool pledge method. We hope that as more and more competitors enter the pledge market, a competitive market can be formed in the pledge field rather than an oligopoly market.

6. The Merge through Q3 / Q4 2022

Eventually, the current Ethereum mainnet will "merge" with the beacon chain proof-of-stake system;

This will mark the end of Ethereum's proof-of-work and the full transition to proof-of-stake;

This was planned before the sharding chain was rolled out;

We used to call this "the docking."

According to Vitalik Buterin's speech at the "ETH & Shanghai" summit, the "merge" on the Ethereum test network Ropsten has been completed, and if nothing happens, the mainnet "merge" should begin in August. However, according to the latest testing and developer meeting, the current test network after the merger is not expected to appear problems, the main network "merger" may also be delayed.

The Ropsten test network Merge was officially completed on June 9.

合并后的Ropsten测试网交易区块演示：

(https://ropsten.beaconcha.in/block/65147#transactions)

The Ethereum mainnet will "merge" with the beacon chain to become its own shard, using PoS instead of PoW. The Mainnet will bring the ability to run smart contracts into the proof-of-stake system, as well as preserve the full history and current state of Ethereum to ensure a smooth transition for all ETH holders and users. After the merger, it also marks that Ethereum PoW has become history, and problems such as power consumption have been effectively solved. With the continuous optimization of Layer2 and the upgrading of technology such as sharding chain, network congestion and disk space will also be solved, and continue to work hard to achieve its great vision of "improving scalability and security while maintaining decentralization", achieving these three performance is a problem known as the scalability trilemma.

7.Post-merger impact

Architecturally, after the merger, the current ETH1 and ETH2 clients become the execution and consensus layers (or engines) of Ethereum, respectively. This means that the node operator of the ETH1 or beacon chain client will need to run the "other half" of the stack, namely run the execution layer client and the consensus layer client, to get fully verified nodes.

Consensus layer: After the merger, PoW block will no longer exist in the Internet, before PoW piece of content can be created on the beacon chain block part of the EIP - 4399 also provides the application in the chain of a method to evaluate whether the merger happened (https://eips.ethereum.org/EIPS/eip-4399), To seamlessly connect existing applications. The following diagram shows the relationship between them:

Block time, merge will affect the average block time of Ethereum. The change from 13 seconds of the PoW theoretical block time to 12 seconds under the PoS mechanism means that the average block time on the network is reduced by about 1 second, and smart contracts that assume a specific average block time in their calculations need to take this into account.

safe head and Finalized Blocks. The application does not need to wait for several blocks to be mined on the new head before confirming or deleting them, like a PoW mechanism.

The final block is the one that is accepted as a specification by >2/3 of the verifiers. To create a conflict block, an attacker must burn at least 1/3 of the total Stake.

For nodes and users, you only need to combine the clients. Existing DApps will still interact in much the same way and require minimal updates. Consolidation will not immediately solve scalability challenges, but will pave the way for sharding to improve data availability and bandwidth. Until sharding arrives, L2 and Rollup are still the best way to scale and reduce gas costs.

A terminal Total Difficulty (TTD) of 50000000000000000 has been selected for the test network Ropsten merge. Pledgers and node operators must manually override TTD in their enforcement and consensus tier clients by June 7, 2022. At present, the merger of Ropsten test network has been completed, and ETH pledged by liquidity pledge methods such as $stETH and $BETH will open the withdrawal function for a period of time after the merger of the main network.

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