Ethereum’s transition to Proof-of-Stake has undoubtedly been the most significant technical accomplishment in the blockchain industry in 2022 and perhaps even beyond.
To facilitate the process, those who wished to secure the Beacon chain had to deposit a minimum of 32 ETH to become validators. The economic incentive to do so was (and still is) represented by the yield that users receive on the staked amount.
However, there’s a catch – users are unable to withdraw their stake until after the Merge became a reality (which it already has) and after withdrawals are unlocked. There’s been quite a bit of chatter lately on that last part, as the Ethereum foundation recently removed the estimated unlock date.
To this end Crypto Potato sat with Matt Nelson – a product manager at ConsenSys – and discussed at length how the team is tackling the challenges and what’s in store for Ethereum 2.0 now that the Merge is officially a few months old.
Enabling ETH 2.0 Withdrawals Won’t Cause a Massive Exit
First things first, Nelson believes that after withdrawals are enabled, this won’t cause a massive exit of users, but the exact opposite – it will bring more people on the Beacon chain.
“When there’s more understanding and the ability to move tokens around, this will bring more people in. If I can enter and freely exit, I have a lot more interest in potentially staking my ETH.”
He also reiterated that this is the key focus of the team and that it’s almost entirely what they’re aimed at in terms of the upcoming hard forks in 2023.
Speaking of hard forks, the one that everyone is looking forward to is the Shanghai upgrade, estimated for release in March 2023.
As Nelson stated, the upgrade will include code that’s known as Ethereum Improvement Proposal (EIP) 4895. One of its key components is to allow staked ether on the Beacon Chain to be withdrawn. In addition, ETH developers will also be addressing the implementation of EVM Object Format in this release, which is a collection of proposals that aim to upgrade the EVM.
Yet, if that doesn’t seem doable by the next All Core Developers call that’s planned for January 5th, they will push it back so that they don’t delay enabling withdrawals.
Sharding: The Next Big Thing for Ethereum 2.0
For those unaware, the Merge is just a step in the long process of making Ethereum a network capable of handling a lot more transactions (potentially thousands) per second without sacrificing security or decentralization.
The next phase in the roadmap is called “the surge,” and it aims to achieve massive scalability through a concept known as “sharding.”
“Sharding is a way to increase the amount of throughput for data that we can have on-chain. All the security comes from the primary layer of Ethereum.
The first step of sharding is to essentially increase the amount of data that L2s (read: Layer two protocols and solutions). This will mean that they can have bigger blocks, they can roll up more transactions, and they can do it more cheaply.”
Nelson explained that the first EIP targeting this is 4844, and it’s called “Proto-Danksharding.” Its technical description reads:
“EIP-4844 introduces a new kind of transaction type to Ethereum which accepts “blobs” of data to be persisted in the beacon node for a short period of time. These changes are forwards compatible with Ethereum’s scaling roadmap, and blobs are small enough to keep disk use manageable.”
Throughout the episode, Nelson also discussed whether or not layer-two protocols will ever be obsolete, the FTX fallout, and much more. Make sure to check the video above and see the full episode.