ETH 1.0 to ETH 2.0 Migration

Note that ETH 1.0 is now called an execution layer and ETH 2.0 a consensus layer.

After everything we have discussed, we should talk about one last thing – Ethereum’s Roadmap 

Ethereum’s Roadmap consists of several phases:

Beacon Chain

It is a Proof of Stake blockchain that went live on Dec 1 2020. It does not handle transactions or Smart Contracts and it runs parallel to Ethereum Mainnet or execution layer (ETH 1.0). It is the foundation of the consensus layer (ETH 2.0)

London Hard Fork or an Ethereum Improvement Proposal 1559

Went live on August 5 2021. An upgrade of Ethereum Mainnet. Remember the Block Reward for mining?

Block Reward = 2 ETH + Transaction Fees (Gas) + Inclusion of an Uncle Block (0.0625 ETH, max 0.125 ETH (2 Uncle Blocks))

Well, that has changed

Block Reward = 2 ETH + Inclusion Fees + Inclusion of an Uncle Block (0.0625 ETH, max 0.125 ETH (2 Uncle Blocks))

Transaction fees will instead be burned forever (etherscan.io/chart/dailyethburnt), which means that Ether is a deflationary asset (https://etherscan.io/chart/ethersupplygrowth). Unlike Bitcoin, with its fixed supply cap of 21 million, Ether’s supply does not have a cap. The only cap there is – a maximum of 18 million Ether can be mined per year. 

The Inclusion fee is sort of a tip. Users pay a premium to ask miners to prioritize their transactions over other ones.

For example, before the London upgrade transaction fees were calculated like this:

Ellie sends Joel 1 ETH, gas limit as we already know is 21,000, gas price at the time was 100 gwei

Total fee = 21,000 * 100 = 2,100,000 gwei or 0.0021 ETH

So, 1.0021 ETH would be deducted from Ellie’s wallet, Joel would receive 1 ETH, the miner would receive 0.0021 ETH

After the London upgrade:

Every block has a base fee or the minimum transaction price

Ellie sends Joel 1 ETH, gas limit is 21,000, the base fee is 100 gwei and the tip (inclusion fee) is 1

Total fee = 21,000 * (100+1) = 2,121,000 gwei or 0.002121 ETH

So, 1.002121 ETH would be deducted from Ellie’s wallet, Joel would receive 1 ETH, the miner would receive 0.000021, 0.0021 ETH would be burned.

Altair Hard Fork

Went live on October 27 2021. An upgrade of the Ethereum Beacon Chain. We already discussed the slashing penalty, when the validator validates a fraudulent block and we also discussed types of nodes in mining, one of which are light nodes. So, the Altair upgrade brings light nodes to the Beacon Chain and inactivity + slashing penalties.

The Merge

Planned to ship in Q2 2022. Beacon Chain will merge with Ethereum Mainnet → the end of the Proof of Work consensus mechanism.