Ethereum 2.0 Complete Upgrade Guide: The Milestone Journey from PoW to PoS

Why Ethereum Needs an Upgrade

As the world’s most important smart contract platform, Ethereum supports the prosperity of ecosystems like DeFi and NFTs. However, with the surge in users, the network is increasingly facing an unavoidable challenge—congestion and high costs. The rising number of transactions directly leads to skyrocketing Gas fees, making it more difficult for ordinary users to participate.

In the long term, if Ethereum continues to rely on the proof-of-work(PoW) mechanism, the required computational power will grow exponentially, which is unsustainable both environmentally and economically. Ethereum 2.0 was born out of this necessity; it is not just a simple patch but a comprehensive architectural overhaul.

The Three Core Changes of Ethereum 2.0

Transition from PoW to Proof of Stake(PoS)

The proof-of-work mechanism protects the network through computational competition among miners. While secure, this approach is inefficient and consumes enormous energy.

Proof of Stake(PoS) adopts a completely different approach—replacing computational power with staked assets. Any user holding 32 ETH can become a validator, participate in network governance and block validation through staking, and earn corresponding rewards. This mechanism significantly lowers the entry barrier and energy consumption while enhancing the network’s democracy.

Shard Chains: Horizontal Scaling of the Network

Currently, each Ethereum node needs to store and process the entire transaction history, which becomes a scalability bottleneck. Shard chains divide the entire network into multiple parallel chains, each handling only a subset of the total data.

This innovative design allows multiple shards to operate simultaneously, greatly increasing overall throughput. Imagine a busy toll station transforming from a single window into multiple parallel channels—efficiency naturally multiplies.

Beacon Chain: The Central Hub of Distributed Consensus

The beacon chain is the coordination hub of Ethereum 2.0. When numerous shard chains run in parallel, a mechanism must ensure they stay synchronized and consistent. The beacon chain plays this role, providing a unified consensus and synchronization mechanism for all shards.

Without the beacon chain, shard data cannot be verified and integrated with each other, and scalability cannot be truly realized. That’s why the beacon chain is the first critical component to be launched in the upgrade roadmap.

Phased Implementation Roadmap

Phase 0: Launch of the Beacon Chain (December 2020)

The first step of Ethereum 2.0 has been completed. The beacon chain officially launched on December 1, 2020, running in parallel with the mainnet. Although shard chains were not yet in place, the beacon chain had already accepted validators via staking contracts.

Validators at this stage could stake ETH but could not withdraw staked assets yet, as the system was still in development. During this period, the beacon chain focused on accumulating a sufficient validator base and reaching consensus through their participation.

Phase 1/1.5: Shard Launch and Mainnet Transition (Starting 2021)

Phase 1 introduced the concept of shard chains, allowing validators to participate in block creation on shards using the PoS mechanism.

Phase 1.5 is a critical integration point—the Ethereum mainnet will officially merge with the shard chains and begin transitioning from PoW to PoS. This is no longer theoretical but a real network transformation.

Merge Event: Official Switch of Consensus Mechanism

The merge marks a watershed moment in Ethereum 2.0’s roadmap. At this point, the entire network’s consensus mechanism will switch from PoW to PoS, and the Ethereum mainnet will merge into the beacon chain system.

It’s important to note that the merge will not cause a fork. Ethereum will continue to exist as a single blockchain, with all historical transaction data fully preserved. Users do not need to take any action to protect their assets. The new ETH tokens will be minted and issued by network validators.

Phase 2: Fully Functional Shard Network and Smart Contract Integration

The final phase will realize a fully operational shard network, at which point Ethereum 2.0 will officially become the main Ethereum network. Shard chains will support smart contracts, allowing DApp developers to deploy applications seamlessly on Ethereum 2.0.

This phase is expected to be implemented after the merge.

Why This Upgrade Is Crucial

Ethereum 2.0 is not optional but a matter of survival. Improvements in scalability, energy efficiency, and economics are directly related to Ethereum’s leadership position in the Web3 ecosystem. Without PoS, sharding, and the beacon chain support, Ethereum will eventually become unusable and lose its competitiveness as a top smart contract platform.

Although full deployment will take time and may even exceed initial expectations, the upgrade is steadily progressing. The Ethereum development community is fully committed to ensuring this transformative shift for the ecosystem’s future is successfully completed.