The 3 Phases of Ethereum’s 2.0 Serenity Upgrade

Ethereum 2.0: Building a More Secure, User-Friendly, and Scalable Blockchain

Ethereum is the world’s most widely used blockchain and its ecosystem of platforms, developers, and users is a driving force in the wider industry of decentralized technology. The Ethereum protocol played a central role in the Initial Coin Offering (ICO) boom that launched many of today’s leading decentralized platforms, and has since become home to the majority of crypto tokens, stablecoins, and non-fungible tokens (NFTs) thanks to its widely popular tokenization standards.

Inherently programmable, Ethereum was also the first blockchain network to introduce smart contracts, enabling the development of trustless, decentralized applications (dApps) on the Ethereum platform that spawned innovations like decentralized autonomous organizations (DAOs) and decentralized finance (DeFi). We’ve written extensively about all of these topics, and we encourage you to read through those articles for more details. Here, we’ll focus specifically on Ethereum and its transition to its updated version — Ethereum 2.0.

The staggering growth of the Ethereum platform has presented a unique scaling problem for the network. Ethereum is experiencing so much development that the network has become congested and the gas fees required to transact on the network have skyrocketed. To solve this problem, Ethereum’s global community of developers is working on implementing novel scaling solutions for Ethereum in a multi-phase update package known colloquially as Ethereum 2.0, and formally as Serenity.

The most defining feature of Ethereum 2.0 — its new Proof-of-Stake (PoS) consensus mechanism — has been a long time coming and is already on the road to implementation. The update from Ethereum’s original  energy-intensive, mining-based Proof-of-Work (PoW) consensus mechanism to a more flexible and scalable PoS methodology may be one of the most important tech implementations in its history.

Although PoW is still used by both the Ethereum and Bitcoin networks, PoS is widely considered to be a more efficient consensus mechanism that will help ensure Ethereum’s long-term viability. When all is said and done, Ethereum 2.0 will be a more secure, user-friendly, and scalable blockchain that can accommodate the growth required for Ethereum to develop into its goal of becoming a global supercomputer. This broad, overarching update package is slated to take place in several phases spanning multiple years of development and implementation.

Ethereum 1.0: From Homestead to Metropolis

The first iteration of Ethereum was known as Frontier, which launched in July 2015 with a PoW consensus mechanism. It was a bare-bones structure that got the network off the ground. It provided a command line interface to mine ether (ETH), and upload and execute contracts — nothing more. Nearly a year later, in March 2016, Frontier was determined to be stable enough for the next phase, Homestead. Homestead provided much of the same beta testing-level experience: a command line interface, more stability, and a few additional features.

Metropolis then succeeded Homestead in October 2017, and was the final phase of Ethereum before the Serenity phase was initiated in 2020. Metropolis delivered a more full-featured user interface, and flung open the doors for dApp development and tokenization, thus facilitating the 2017 ICO boom. Throughout Ethereum’s history, the continued development of a scalable, secure blockchain network has been a constant, as has the open-source, community-based commitment to governance that underlies the proposal and development processes.

These first three phases of Ethereum’s developmental roadmap were completed between 2015 and 2020, laying the groundwork for the Serenity phase to begin in December 2020. 

Serenity Phase 0: Beacon Chain and PoS Framework

Discussed in detail in our deep dive into phase 0 of Ethereum’s transition to Ethereum 2.0, Phase 0 of the Serenity update package went live on December 1, 2020, though its effects won’t be felt for years to come until the disparate phases are finally integrated into a functioning whole. Its primary purpose was to lay the groundwork for the Beacon Chain — the main coordinating mechanism of Ethereum’s forthcoming PoS blockchain.

Phase 0 delivered three main technological implementations to the Ethereum ecosystem: the Beacon Chain, the PoS consensus mechanism (dubbed Casper), and validator nodes. These features went live in a trial state in December 2020, operating in parallel to the legacy Ethereum blockchain. As development on Serenity progresses, however, the Beacon Chain will become the primary settlement layer for the Ethereum network and will be responsible for coordinating the forthcoming shard chains. This aspect will debut on the Ethereum mainchain as part of Serenity’s forthcoming phase of updates — Phase 1.

Ethereum 2.0 Phase 1: Sharding Framework

The main objective of Serenity’s Phase 1 update is the implementation of shard chains and roll-ups — which we cover in depth here. Sharding is a cutting edge scaling solution that breaks down the Ethereum network into smaller shards to increase both capacity and speed of transactions. Roll-ups initiate a process of off-chain transaction aggregation that bunches transactions together for execution before confirmation on the main chain. Implemented in concert, both techniques are expected to be a boon to Ethereum’s transactional capabilities.

Ethereum 2.0’s Phase 1 update will break down the single Ethereum blockchain into 64 shard chains, enabling parallel processing to reduce the latency that comes from linear processing using a single blockchain. When sharding is fully implemented, the Beacon Chain will eventually serve as the base layer Ethereum blockchain, providing settlement and finality for transactions taking place on shard chains. However, these Phase 0 and Phase 1 features won’t function together until the following phases: Phase 1.5 and Phase 2.

Phase 1 is estimated to arrive sometime in 2021, likely in the latter half of the year barring any major development setbacks.

Ethereum 2.0 Phases 1.5 and 2: Bridging the Gap

Until this point on the Serenity development timetable, Ethereum 1.0 and Ethereum 2.0 remain two entirely distinct ecosystems. ETH transferred from the legacy protocol to the Ethereum 2.0 Beacon Chain cannot be reversed, and dApps only exist on whichever blockchain they are natively built on. Phase 1.5 is largely tasked with providing a bridge between the two environments.

The merging of the two Ethereum protocols is being colloquially referred to as docking — where the legacy Ethereum 1.0 mainnet will be “docked” with the Beacon Chain and its accompanying architecture of shard chains. The Ethereum 1.0 blockchain will become one of the 64 shard chains, all of which will operate using the new Ethereum PoS protocol. The Ethereum 1.0 mainnet shard will provide the history and current state of Ethereum to the Beacon Chain, making the transition from one network to the other smoother. The Beacon Chain will then manage and coordinate validators and their responsibilities with various shard chains.

Phase 1.5 will bridge the previously independent components of Phase 0 and Phase 1 — and will represent the first time that Ethereum 2.0 is officially live and its effects finally felt. The Ethereum 1.0 mainnet, contained in a shard chain, will bring smart contract functionality to the new system at long last. Phase 1.5 is slated to ship sometime between 2021 and 2022, some time after Phase 1 has been implemented and determined to be fully functional and without bugs.

Once the legacy Ethereum 1.0 blockchain is successfully docked in the Ethereum 2.0 ecosystem and is fully tested, Phase 2 will take effect, initiating cross-shard interoperability and native dApp development on Ethereum 2.0. Phase 2 will give shard chains the ability to handle transactions and smart contracts, not just process data as they were limited to in Phase 1 — effectively transforming each of them into their own full-fledged mainnets.

Another development arriving in this phase of Serenity is the addition of programming languages for smart contracts. Until now, smart contracts have only been coded using Ethereum’s native Solidity programming language — Phase 2 of Serenity will allow them to be written in any programming language.

Phase 2 is a technically distinct but complementary development phase to Phase 1.5, and its release timeline will immediately follow the successful testing of Phase 1.5. Many of the technical details regarding how cross-shard communication, transaction, and dApp deployment will be accomplished have yet to be explicitly stated as of April 2021, though they will likely be outlined in more detail as these phases draw nearer.

Ethereum 2.0 Phase 3: Final Touches

Phase 3 is the least defined phase of the Serenity update. It is essentially a catch-all phase reserved for any miscellaneous needs that arise or issues that must be resolved before Ethereum 2.0 can be considered officially complete. This could include, for example, the creation of extra shard chains in addition to the original 64, or increased privacy or security implementations.

It is estimated that each phase of Serenity will take roughly six to eight months to complete. With the launch of the Beacon Chain in Phase 0 in December 2020, the tentative project completion date for Serenity is expected to be sometime in 2023. Of course, as the update is carried out, tentative timelines will be adjusted accordingly as the Ethereum 2.0 undertaking is a dynamic and ever-evolving endeavor.

It’s important to realize that the development currently being undertaken on the Ethereum network is both unprecedented and innovative. It’s an ambitious endeavor with many unknowns, but it builds upon the incredible work already undertaken by the Ethereum network and the overall blockchain industry — and has the potential to realize the revolutionary potential of decentralized technology when completed.