Ethereum 2.0: Revolutionary Transformation of the Ethereum Network

Transition to New Foundations

The Merge is a milestone in the evolution of Ethereum, marking a definitive departure from energy-intensive Proof of Work to Proof of Stake. This fundamental change is not merely a technical update – it is a rebuild of the entire network infrastructure. When the Ethereum blockchain adopts the new consensus mechanism, validators, rather than miners, will be responsible for the security and confirmation of transactions.

In practice, this means that any holder of at least 32 ETH can join the network as a validator by staking their tokens and receiving rewards for participation. This change drastically lowers the barrier to entry and energy consumption of the network, but it requires a completely different approach to security.

Scaling problem that changes the entire industry

Ethereum has been struggling with the issue of scalability since its inception. Each node in the network stores a complete copy of the blockchain and must process each transaction independently. With the increase in the number of users and decentralized applications (DApp), the cost of transactions (expressed in gas) has risen dramatically, making the platform impractical for ordinary users.

Ethereum 2.0 introduces sharding – a mechanism that divides the network into thousands of parallel chains (shards). Instead of each node processing the entire network traffic, each node only handles a fragment. This solution theoretically can increase throughput to 64 thousand transactions per second, compared to the current limitation of a dozen transactions per second.

Beacon Chain as the network coordinator

Without a central coordination point, thousands of parallel operating shards could not function harmoniously. The Beacon Chain ( tracking chain ), launched on December 1, 2020, fulfills exactly this role. This new blockchain operates in parallel to the main network, establishing consensus and synchronizing all shards.

The Beacon Chain does not process user transactions – instead, it manages a list of active validators and their balances. This is a transitional architecture, but absolutely crucial for the implementation of ETH 2.0. Validators who are involved in this phase cannot withdraw their ETH tokens until the sharding system is fully deployed.

Multi-Phase Implementation of Ethereum 2.0

Phase 0: Foundation

The first stage focuses solely on stabilizing the Beacon Chain and recruiting validators. Shard chains do not yet exist, but the infrastructure to support them is being built. Those who stake ETH in this phase are participants in an experiment that will determine the future of the entire network.

Phase 1 and 1.5: Introduction of Shards

In the next stages, the proper shard chains will appear, which will be able to generate blocks using Proof of Stake. Phase 1.5 signifies the integration of shards into the main network and the beginning of the migration from PoW to PoS. These steps began in 2021 and continue in further development stages.

Merge: Convergence of two networks

The merge is the moment when the Ethereum mainnet is shifted to the Beacon Chain. The previous network operating on PoW ceases to exist as a separate chain. The entire transaction history, all smart contracts, every user balance – everything transitions to the new system seamlessly. This is not a hard fork, which is a split of the network, but a complete migration of data and functionality.

ETH users do not need to take any action. Their funds remain safe because the main chain does not lose data – it only changes the consensus mechanism.

Phase 2: Full functionality

The last phase is the moment when Ethereum 2.0 will be fully operational. Shards will no longer just store data – they will be able to execute smart contracts. Developers will be able to build decentralized applications (DeFi, NFT, games) directly on the shards, with complete integration with Ethereum.

Why Ethereum 2.0 is Crucial

Without these improvements, Ethereum will get stuck at a point where costs become prohibitive and throughput insufficient. DeFi, which has built itself on this platform, would lose its competitiveness. Ethereum 2.0 is not just an upgrade – it is a defense of its position as the leader of the smart contract ecosystem.

The implementation process is complex and will take longer than many people expected. However, the change is already in motion. Each phase of eth 2.0 brings us closer to a network that will be scalable, energy efficient, and capable of handling billions of transactions without compromising on security or decentralization.