ETH 2.0 is a much anticipated upgrade which completes the ETH 2.0 Phase 0 Beacon. The two main differences of ETH 1.0 and ETH 2.0 are its consensus mechanism and scalability mechanism. Ethereum 1.0 follows the proof of work mechanism which has many restrictions on the blockchain platform. Ethereum 2.0 overcomes those restrictions by introducing more reliable and convenient proof of stake mechanism. This update provides features like improved security, scalability, and energy efficiency for the Ethereum platform.
The proof of work mechanism depends on physical miners and electricity. Instead of that, proof of stake relies on virtual miners and depositors. Current version of Ethereum has a single chain made up of consecutive blocks. This scalability mechanism is secure and easy to verify. But requiring each full node to process and validate each transaction in consecutive blocks can affect the ability to process transactions quickly. Thus the updated version introduces a new scalability mechanism that accelerates the performance of the Ethereum platform known as Shard Chains. This mechanism divides the data processing responsibility among many nodes and allows transactions to be processed parallely.
ETH 2.0 does not fixes scalability issues: Analysts argues
ETH 2.0 claims that it introduces a more easy and convenient scalability mechanism. But the analysts argue that ETH 2.0 does not fix the scalability problems of Ethereum. They opinionated that ETH 2.0 along with the layer-2 implementations might not be able to keep up with the growth in network usage from DeFi. it is initially set to begin with 64 shards, each shard could potentially operate as a separate chain with its own transaction history. So the network would increase its transaction capacity by 64-fold.
The co-founder of Ethereum, Vitalik Buterin endorses the use of existing layer-2 scaling solutions like Zk-sync, OMG, and Loopring for ordinary transactions. It has the potential to scale the number of transactions from 12-15 transactions per second (TPS) to over 2,500 TPS. As high gas fees are effective exchanges, they are increasing their transfer fees, pushing users to find other alternatives for moving their crypto. So by the implementation of Zk-roll ups this adoption will become minimum.
Considering the effect of all the phases of development of the new chain, it will greatly improve the performance while leading by Vitalik and complies with the community’s wishes, the possibility of large-scale community division or fork is relatively small at present. It can be considered that the upgrade of the full version of ETH2.0 will bring an all-round reshuffle of the blockchain, DApp, Defi, and even allow some national-level projects to be moved to ETH, which will have a profound impact on the whole industry and this contradicts the arguments of analysts.