Ethereum is the second-largest cryptocurrency by market capitalization, only behind bitcoin, and it has risen to prominence for being a pioneer in DApps, NFTs, and its smart contract compatibility. These new features are the root cause for Ethereum’s network congestion, as its 15-30 transactions per second limit have limited its scalability.
This year, it has been one of the standout performers with its token price rise and the layer-2 Blockchains built on it. To further cement its place at the top of the altcoin ladder, it is moving to the Proof-of-stake consensus, a less energy-consuming consensus mechanism. This is because there are many protocols, called Ethereum Killers, directly targeting Ethereumís prominence.
These protocols offer the same perks as Ethereum with more transactions per seconds, less fees, and greater speed. Before we look at Eth 2.0 (redot.com/eth2/), let us briefly see how to build Ethereum-compatible smart contracts.
Like its name says, smart contracts are contracts that are smart. They are a self-executing set of rules that remove the need for intermediaries. Most recently, they have become popular due to the rising prominence of DeFi, and their roles of executing, controlling, and documenting legal events as required of the contract are in line with blockchain’s tenets of decentralization.
Ethereum is the most popular name in the crypto industry, miles apart from other names like Solana, Cardano, and Binance smart chain. Although it was not the first token to bring Smart contracts (that award goes to bitcoin), Ethereum’s smart contracts are widely used. Much more elaborate than Bitcoin’s limited Smart Contracts.
Ethereum uses Solidity as its Smart contracts programming language, making them better than Bitcoin’s restrictive language, the Bitcoin Script. Although Bitcoin” s developer, Nadav Ivgi, has recently built a new smart contract language, the deed happens to be done, and there seems to be no catching Ethereum’s smart contract now.
With the smart contract of the Ethereum blockchain, developers can just about do anything to facilitate trust and decentralization. Giving more instructions with fewer restrictions.
Although this is beneficial, there is also a major flaw attached to it. The novel features on Ethereum’s smart contracts are largely untested; hence the chances of vulnerabilities are high. Bugs and rug pull are common occurrences with Ethereum smart contracts, and millions of dollars have been lost to these bugs.
Most recently, a user called the over $ 32 billion worth of Ethereum locked in the Eth 2.0 the largest Ethereum contract ever. Even though it is a needed requirement for safety of the network, the crypto news is true.
Some of the ways Ethereum smart contracts work include:
- multiSig accounts: Ethereum’s smart contracts can be used to have a joint account where funds are only disbursed when a required threshold of users agrees.
- Financial Agreements: smart contracts can be used to manage agreements between multiple users. The rules of the agreements can be programmed into a smart contract hence fostering trust between all the parties.
- Third-party representation: smart contracts can be used in place of a third party, and they can also work as teams with other smart contracts in the same chain and with data outside the chain if need be.
- Information storage: smart contracts can be used to store information regarding the data involved. Data like membership info, terms of agreements, and registration information can be stored immutable and secure.
Building an Ethereum smart contract is a very technical and time-consuming process. We cannot cover the whole process, but here are a few things to note.
First, you will need a Metamask wallet. Here, you will run a demo smart contract with dummy ether. The purpose of this is to get it right before you run it on a live account. Metamask has four different test networks. It is also important to note that these networks are used for testing only, more like dummies.
After this, the next thing to do is to test the Smartcontract by using dummy Ether. You can add these Ether by clicking the Deposit tab and selecting Get Ether. After adding these dummy Ether, you can go to the Remix Browser IDE and start writing your smart contracts using the Solidity language. You can use other browsers, but the Remix Browser has more features that are best suited for Smart contracts. A quick headstart would be by using https://remix.ethereum.org.
The Ethereum 2.0 moves from the proof-of-work consensus to the proof-of-stake consensus. You need not sell your current Eth as the transition will be completed without holders feeling any difference’ except for cheaper gas fees and faster transactions.
The move will involve Validators instead of miners, and each validator would be required to deposit 32 ETH before the network goes live. The system requires a minimum of 16,384 validators at launch, but currently, there are over 280,000 validators on the network. Although Eth 2.0 has been drawn back due to technical issues, it seems on track to launch by the end of 2022.
Vitalik Buterin has called for developers to test for the merge on the beacon chain, and they can release their findings on a social media platform. More information on the Eth 2.0 launch and its time frame can be seen on the ETH explorer.