Eth2 (also called Ethereum 2.0 or ETH 2.0) refers to the ongoing upgrade that is currently taking place on the Ethereum blockchain. The first phase – the launch of staking and the Beacon Chain – started in December 2020. On September 15, 2022 Ethereum completed the transition from a proof-of-work to a proof-of-stake blockchain, also known the merge. Going forward, additional upgrades to the network will make it more secure, more sustainable, and capable of handling a much greater volume of transactions.
What does this mean, and how is it going to affect current users of Ethereum and MEW specifically?
From its launch in 2015 and until the merge in September 2022, the Ethereum blockchain was maintained through the proof-of-work (PoW) model. This is the original blockchain model, also used by the Bitcoin blockchain. While effective, it is not the best option for making the network secure and scalable, and requires a lot of electrical power to run. Transitioning to proof-of-stake (PoS) has always been part of the Ethereum road map, because as Ethereum grows, the proof-of-work model becomes unsustainable.
Since the merge, Ethereum is using the proof-of-stake model (PoS), which reduces electricity usage by 99% and will help significantly improve transaction throughput in the future. In this system, users who have staked 32 ETH become validators who maintain the blockchain. Being an independent validator means running specific software on a computer that must be connected to the internet 24/7. If you stake through a staking provider, validator maintenance will be done by the provider for you. Validators are rewarded with ETH for validating blocks, and penalized if they are not performing validation duties as required. This validation process replaces the proof-of-work process.
The other big change for Eth2 is the introduction of shard chains. Shard chains are smaller chains that will run alongside the main Ethereum blockchain, increasing the number of transactions that can be validated and improving efficiency. Block validations will happen on shard chains and will be recorded and verified on the Beacon Chain.
As these changes take place, current Ethereum users do not need to do anything for the upgrade. All Ethereum assets and platforms, including ETH, ERC20 tokens, NFTs, DApps are automatically compatible with Eth2. MEW supports the merge and all mainnet Ethereum upgrades.
To help make the Ethereum network more secure and earn ETH rewards in the process, you may choose to stake your ETH and become part of the proof-of-stake model.
As mentioned above, to have a full validator, a user needs to stake an exact amount of 32 ETH. Staking 32 ETH multiple times allows a user to run multiple validators, increasing the chances of block rewards. Users can run their own validators from their computer, but this requires some technical knowledge. It's also possible to stake a full validator through a provider, or to stake smaller amounts with liquid staking. For more guidance, read about staking with MEW wallet app and MEW web.
Staking ETH means depositing it into an Eth2 staking contract through a staking DApp or platform. This ETH gets locked in the contract for the foreseeable future as Eth2 phases of development move forward. The most current estimate for when ETH and staking rewards can be withdrawn is 6-12 months after the merge. For more information about the merge, read our FAQ.
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