Ethereum 2.0 is one of the biggest news in the space of cryptocurrencies. The model is being trashed on social media since it asks for a brand new chain to co-exist with the current one. However, the critics stem highly out of misunderstanding and miscommunication. The team has presented their recent roadmap on DEF CON. It involves a simultaneous transition to a sharded architecture. You can expect various shards or chains that stores different parts of the Ethereum blockchain including Ethereum 1.0 data. Effectively, it replicates the current Ethereum blockchain in multiple shards.
PoW to PoS model
If you want to validate a smart contract, the participants in the particular shard alone will be involved. If you are a validator, you are going to validate just one shard rather than the entire blockchain. It works towards combating the scalability issues of Ethereum blockchain. Besides, you have the transition to the Proof of Stake (PoS) system from the Proof of Work (PoW) system. In addition, there are a lot of major changes which needs to be introduced.
Will my ETH funds become old and useless?
People have a lot of confusions with the ongoing journey towards Ethereum 2.0. People fear what they are going to do with their ETH funds, when Ethereum 2.0 comes out. The long and short answer is that the ETH you own currently will not become outdated. The fact is it will not effect your already existing funds in any way. The eth you own will very much be active and of the same value. In fact, it will automatically exchange to eth 2.0 over the course of time.
Once the phase 2 is complete, there will be two active Ethereum chains. Ethereum 1.0 is a proof of work (PoW) chain and Ethereum 2.0 is a proof of stake (PoS) chain. In phase 2, users become validators by staking their eth. The eth 1.0 tokens have to be sent to the new eth 2.0 chain. It is a one way bridge that doesn’t allow recovery of ETH 1.0 tokens.
New and improved sharded architecture
As per the latest proposal, eth 1.0 transactions will transferred into a shard in the Ethereum 2.0 chain. Sharding, introduced as a concept form in Eth 2.0 is not much complicated to understand. It refers to the system of dividing Ethereum 2.0 into multiple layers. Each layer is called a shard and has its database consisting of account balances, smart contracts etc…
Bridging Eth 1.0 into Eth 2.0
In the words of Danny Ryan, “once state execution layer is in the new 1024 shards”, users can transfer ETH from PoW chain to the shards directly. The aim is to roll PoW chain entirely into one of the shards. Proof of Work (PoW) chain will act as the anchor layer in Ethereum 2.0. Hence, there is no need to worry about your ETH going old and useless. You can either become a validator by staking the Ethereum or just hold on to Ethereum 1.0 till it is fully integrated with the new chain.