Introduction
Beacon or Ethereum 2.0 is an upgrade to one of the most popular blockchains, Ethereum. One of the immense changes in ETH 2 is the consensus model shift from proof of work to proof of stake. Ethereum 2.0 have the concept of validators instead of a miner. Also, to become one of the ETH2 validators, there is a requirement of 32 ETH, and also possible to stake with less ETH by using pools.
Limitations of Ethereum
High transaction fees
Ethereum proof of work consensus relies on miners and high-end hardware for mining new blocks. Also, due to the limitation of the POW mechanism, it requires more gas fees, and transaction fees are very high on the Ethereum network. Thus transaction fees during peak hours can go up to hundreds of dollars.
Scalability
The Ethereum network supports approx 15 transactions per second and is one of the major limiting factors for onboarding new users and launching many new projects. Also, to make Ethereum more scalable, ETH2 aims to support thousands of transactions per second.
Security
Security of a decentralized network is always one of the top priorities, and ETH2 aims to increase the network's security. It is against all forms of attack, that includes a 51% attack where hackers can force through fraud changes. Also, by controlling the majority of the network's sustainability the well-known proof-of-work-based consensus model used by the current Ethereum network requires a lot of computing power and energy. The ETH2 aims to make Ethereum better for the environment by replacing energy-intensive proof of work with proof of stake.
Working
Ethereum's proof-of-work consensus model is a well-known and tested approach for building cryptocurrencies. The Proof-of-work miners invest electricity resources to validate transactions and secure the network. The model requires massive amounts of energy to work properly and protect the network from 51 attacks proof-of-stake tries to address the power consumption concerns by getting rid of the miners completely. Also, the proof-of-stake consensus model relies on economic incentives, and users who want to secure the network stake their ETH and become validators. In proof-of-work, the incentivization of each validator is to validate transactions by obtaining similarly to miners. It is for both the block reward and the transaction fees.
Security
Proof-of-stake system implements a slashing mechanism where validators lose their staked ETH if they decide to attack the network. To pull off a successful 51% attack in a proof-of-stake system, the attacker would have to control 51% of the validators, which would require owning a large amount of liquidity.
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