What is Ethereum 2.0?

Ethereum 2.0 represents the 2020 upgrade, introducing a new Proof-of-Stake algorithm. Smart contracts and other functionalities continue to operate in the original network. A transition from Eth1 to Eth2 is possible, but reverting is not supported.

Deployment Phases

The deployment phase of Ethereum 2.0 commenced on December 1, 2020. The new mechanism was introduced in a test network using tokens for verification. Key parameters of the Proof-of-Stake mechanism include:

  • Funds and Stakers Management: Stakers play a crucial role in managing funds.
  • Random Number Algorithm: A random number algorithm is employed for block and curator selection.
  • Proposal Voting: Voting occurs for proposals to set the block size.
  • Penalties and Rewards: Penalties are assigned transparently, and rewards are distributed through a fair procedure.

The initial phase involves deploying a network with 64 shards for testing the new algorithm's functionality and efficiency. Bidirectional interaction links apply to all components. The merge of old Ethereum with new mechanisms won't lead to global changes in fragmented networks. Automatic configuration and maintenance of the mechanism are implied.

The implementation of the new algorithm involves migrating all virtual machines and smart contracts to the platform. After the launch, both networks will operate simultaneously. However, reverting to the first version is considered impossible. Users are allowed to utilize the Eth1 deposit agreement.

Emission and Proof-of-Stake

The current mechanism evaluates the stake's value for proving coin ownership. Each new coin batch is assessed differently. The first version of Ethereum operates on the principle of proof-of-work, while the second operates on the proof-of-stake algorithm.

Both groups receive equal rewards, increasing inflation levels until the networks merge.

Eth2 emission depends on the number of tokens. The annual coin emission relies on the algorithm's refinement. Transitioning from Eth1 will grow the investment fund and cryptocurrency value. The pace of development will impact the final reward size. The more coins used, the smaller the reward for each transaction, leading to the destruction of many tokens and reducing overall inflation.

Blockchain Merger

Over time, a complete merger of Eth1 and Eth2 is planned. This requires creating a separate platform and algorithm planning. The Proof-of-Work system will continue to function but will transition to a new algorithm after reaching a certain threshold. Rewards for work will become obsolete according to the inflation development schedule.

Technical Characteristics and Functioning

Proof-of-Stake is the principle behind the new algorithm's operation. The chain of assets chosen by the majority of representatives is selected. The voting mechanism also involves specific rules. A large pool is divided into separate blocks where elements of the group are randomly selected. This division ensures the participation of each fork in voting, enhancing the system's scalability probability in the future. In reality, the procedure is more complex.


When voting for a block, it's necessary to confirm a specific transaction, achieve set points, and cast a vote. This mechanism ensures the stability of information processing and the security of transfers. Only confirmed blocks undergo verification and finalization. Waiting for transaction confirmation takes no more than 12.8 minutes.

Sanctions for Violators

Violations of the new Ethereum 2 network's rules result in penalties in situations such as:

  • Attempting conflicting transactions in one proposal.
  • Providing two conflicting votes for transitions.
  • Voting with references to transitions.

All results and references must be in a unified sequence for voting to be considered legitimate.


The implementation of the new system introduces shards, with a total of 64. A two-way interaction mechanism ensures transition via cross-links. While absent in some blocks, each must reference the Beacon Chain.

One participant is responsible for conducting transactions at a specific time, with all participants indicating their votes during this period. Beacon Chain is introduced through the cross-link mass.

Prospects and Prices

The new technology allows for increased capital and independent shard selection for investment in profitable offers. The main drawback lies in the complexity of Ethereum 2.0. With numerous security systems, risks of delayed voting results and overdue updates are possible. Stay updated on FlyPay's blog for more insights into Ethereum's latest advancements.