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What is ETH 2.0?

Jul 16, 2025MEXC

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ETH 2.0 represents an upgraded version of Ethereum, building upon the initial Ethereum version that debuted in 2015, making the platform now 8 years old.

The most notable distinction between ETH 2.0 and its predecessors is the change in the consensus algorithm. Ethereum has transitioned from its original Proof of Work (PoW) mechanism to the current Proof of Stake (PoS) mechanism.

On September 15, 2022, the Ethereum Merge upgrade was completed, marking the official transition into the PoS era.

1. Why Choose Proof of Stake (PoS)?

1.1 PoS offers heightened security at the same cost.

1.2 Under the PoS consensus mechanism, it is easier to recover from attacks. Proof of Stake incorporates a built-in "slashing" mechanism through which most of the attacker's funds (excluding others' funds) will be automatically destroyed.

1.3 Compared to ASIC, PoS boasts greater decentralization. The lower entry barrier of PoS facilitates the attraction of more users to participate.

2. The Merge and Beacon Chain

The Merge, often referred to as the consolidation, refers to the merging of the Ethereum mainnet and the Beacon Chain. The result of this consolidation is the transition of Ethereum's consensus mechanism from the original PoW to the current PoS.

The Beacon Chain is a special chain created solely to operate a PoS consensus mechanism blockchain. This chain, which does not host any applications or tokens, was launched as early as December 1, 2020.

Therefore, when the Beacon Chain and the Ethereum mainnet merged, apart from the change in consensus mechanisms, no other changes were induced.

3. Effects of the Merge

Significant Reduction in Energy Consumption: Data and calculations show that the energy required to maintain Ethereum's operation after the Merge is equivalent to basic computer usage, resulting in a reduction of around 99.95% compared to before, positioning Ethereum as the world's most environmentally friendly financial system.

Decreased ETH Issuance: According to Ethereum Foundation data, the original PoW chain rewarded miners with approximately 16,000 ETH per day. However, after the Merge, only about 1,600 ETH per day are needed to compensate verification nodes, greatly reducing the issuance of Ethereum.

Introduction of the EIP-1559 Protocol and Burning Mechanism: With the implementation of the EIP-1559 protocol and the addition of a burning mechanism, the daily average burn of ETH fluctuates at or around 6,000 ETH, resulting in an overall deflationary trend for ETH.

4. Why are Gas Fees Still High After the Merge?

The Merge has no impact on gas fees.

Following the Merge, the initial plan of the Ethereum team was to introduce sharding, a solution that would have lowered gas fees within the Ethereum network. However, Ethereum has abandoned the sharding plan and shifted its focus towards Layer 2 technologies, such as Rollup and Danksharding.

Currently, there are several Layer 2 networks in operation, including Arbitrum One, OP Mainnet, Linea, zkSync Era, Polygon zkEVM, and others. Gas fees on these Layer 2 networks are significantly lower than those on the Ethereum network, which leads to reduced costs for users. Ethereum's gas solution aims to migrate users to Layer 2 networks for more efficient and cost-effective transaction experiences.

5. Staking

Staking refers to the act of depositing 32 ETH to activate validator software. As a validator, your responsibilities include storing data, processing transactions, and adding new blocks to the blockchain. This ensures the security of Ethereum and allows you to earn new ETH in the process.

Unlike PoW mining, where staking 32 ETH qualifies you as a validator node with account-keeping and voting capabilities, the more ETH you stake and the longer you stake it, the greater the rewards you can ultimately earn.

ETH 2.0 has given rise to new staking services. The cost of 32 ETH is now a significant sum, which may not be readily available to many users. If you wish to participate, you can choose to join third-party staking pools to receive a portion of the rewards. Lido, for example, is one of the largest staking service providers on Ethereum.

6. Benefits of Staking

Earn Rewards: Actions that contribute to achieving network consensus are rewarded. By simply running software that correctly packages transactions into new blocks and verifies the work of other validators, you can earn rewards, as this helps maintain the security of the blockchain.

Increased Security: As the amount of staked ETH increases, the network's strength grows, demanding a substantial amount of ETH to control the majority of the network. To launch an attack on the network, one would need control over the majority of validators, which in turn means controlling a significant amount of ETH within the system, an almost impossible feat.

Sustainability: Validators do not need to perform energy-intensive PoW calculations to participate in network security. This means staking nodes can operate on relatively simple hardware with minimal energy consumption.

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