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- For Down the Rabbit Hole,
which is the special segments where I asked myself
the question that I wanted to ask myself,
but you fail to ask.
So I get to ask it instead and then answer it
and pretend like it's an original question
that nobody ever thought of before,
because I asked it.
Great question Andreas.
Alright, so what is it Ethereum 2.0?
When is it happening?
Is it real and what should I expect?
Now you asked similar questions,
but I want to phrase it in that particular way
and great question Andreas.
What is Ethereum 2.0?
Ethereum 2.0 is a clean slate design of Ethereum
intended to replace the Ethereum, in a state transition
that will occur approximately one to two years from now.
This represents a transition of Ethereum
from a proof of work system to a proof-of-stake system
and also from a single chain system
to a sharded chain system of 64 parallel executing chains,
which are converged on a coordination chain
called the beacon chain.
The beacon chain itself is a chain
that doesn't actually store any of the transactions or data.
Instead the beacon chain is the basis
for the proof-of-stake system.
It keeps track of the proof-of-stake validators.
Validators are those who commit 32 Ether
and that is the minimum you can make
to become a validator and then validate blocks.
If they validate them correctly, they get rewarded.
With a percentage return of between 2%
and up to possibly 18% per annum on their underlying stake.
If on the other hand, they validate an incorrect block,
they get severely penalized, in some cases
losing up to 100% of their staked amount.
Although I believe in the first implementation,
it's not that harsh, but it's certainly a lot worse
than their reward, heavily incentivizing people
to validate correctly.
Validators also get penalized,
if when called to validate a block, they are not online.
So being online continuously is a requirement
to be a validator.
If a validator gets penalized several times
as they lose stake, they reach a point
where their stake drops below 16 Ether
and they get kicked out of the validation pool.
So how do validators get chosen?
Well, that's part of the job of the beacon chain.
And it uses a randomness engine called RANDAO VDF
as far as I understand it.
And RANDAO VDF or verifiable delay function
is a system that produces a random number generator
through consensus.
This random number generator is used to select validators
from the pool of validators and give them the opportunity
to validate a block.
So validators stake into a contract,
they put down their 32 Ether or more of stake,
and then they wait until they are called to validate
by the selection of a random number that identifies them
as a chosen validator and then they validate
the block that they are handed.
If they've validated correctly,
they can earn a small reward.
There are some other nuances and details,
that's what the beacon chain does.
The beacon chain was launched on August 4th
and is currently operating as a Testnet.
It had been in testing for almost two years
and now it is running with validators staking Testnet Ether.
This phase called phase zero is intended to last
between one and two years.
At the end of this starts phase one
and phase one is the transition of the,
is the introduction shards and the transition of the system
from proof of work to proof-of-stake.
And then phase 1.5 is the incorporation
of the existing Ether one chain into the Ether two chain.
And this is done as a state copy, meaning that
whatever balances, smart contracts, addresses
and things you owned on the Ether one chain
thereafter become available on the Ether two chain
and the users don't have to change anything.
The entire Ether one chain rungs as one of the 64 shards
and this allows for scale failing of a factor
of up to a 64X, all of the shards then get coordinated
into the Bitcoin chain at specified intervals.
I believe those are called ebox.
So that's the plan, Ethereum is moving to proof-of-stake
and a sharded scalable architecture.
And the intention was, instead of trying to make
incremental disruptive changes to the base Ethereum chain,
instead it was implemented as a clean slate implementation
which at some point has a migration of state
so that it subsumes the entire Ether one chain
in a way that users don't even notice
and all of their data states and funds carried forwards
to the Ether two chain.
This allowed for much more radical experimentation
and rewriting of code from scratch,
in order to implement these rather ambitious goals.
So it's running right now.
Don't know how long it's going to run,
that depends on how well it runs.
In the first couple of days,
there was a bit of a shortage of validators,
but I believe that's being fixed now.
I'm watching it with great interest,
I'm not currently running a validation note.
Unfortunately I don't have the time to keep it up
and running and monitor it carefully.
Because as I mentioned before, if it goes down,
you lose money.
Even for Testnet Ether,
I'm not willing to do that cause I really don't have
the time, but I am watching this rather carefully
and with great interest.
Because if this implementation is successful,
it represents a very significant advancement in the science
of consensus algorithms and in the science
of proof-of-stake.
Interestingly, there's another question
that came up related to this, which might be a good segue
from this Down the Rabbit Hole.
So that was my question of the day, I hope you enjoyed it.
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