Thread by @Cooopahtroopa

So you heard Eth2 is 'launching' today.

But, what does Phase 0 actually mean?

Quick thread on the Beacon Chain and its implications 🔽

For starters, Eth2 marks the transition of Ethereum from Proof-of-Work to Proof-of-Stake.

In layman's terms, the network is being upgraded to be faster and more secure.

Most transactions *should* cost only a few cents and be executed in near real-time.

The upgrade is the most complex Ethereum has seen to date, and therefore broken into different 'Phases'.

Phase 0 is the start of this process, marked by today's finalization of the Beacon Chain.

With Eth2, validators stake $ETH to secure the network.

To ensure Eth2 is secure at launch, the Ethereum community locked the minimum threshold of 524,288 ETH (worth ~$315M) needed to deploy the Beacon Chain on mainnet.

More on this milestone and it's implications on @DefiantNews 📝
thedefiant.io/eth2-is-alread…

The Beacon Chain starts Phase 0 by 'containing all of the machinery behind eth2's consensus, tracking validators and their balances.'

The Beacon Chain is the mothership, acting as the base layer for everything that happens offchain in later Phases.

ethereum.org/en/eth2/beacon…

The Beacon Chain is NOT the full execution of Eth2.

This migration will happen gradually over the next year(s), through the following Phases:

Phase 0 – Beacon Chain
Phase 1 – Shards
Phase 2 – Execution

Stakers earn a higher APY today for locking their $ETH until later Phases.

Now, Staking as a Service providers come into the fold.

Anyone can stake 32 $ETH to run a validator on Eth2.

Staking providers allow you to stake less than 32 $ETH without running your own node.

Stakers earn issuance for maintaining the foundation and securing the network.

Here's where things get interesting.

All staked $ETH is locked until at least Phase 1.

This means that staking providers will start issuing different derivatives of $ETH.

We will soon see AMMs like @CurveFinance create pools for wrappers like @Rocket_Pool's $rETH 🚀

Super simple right?

Basically, more $ETH will be staked on Eth2, and more wrappers will be created in return.

Wrappers represent a 1:1 claim on future ETH, and are fungible within #DeFi in the meantime.

Remember, not all wrappers are created equal!

https://twitter.com/Rocket_Pool/status/1333675802865463297?s=20

So this leaves us where we are today.

Over the next few months, the discussion will be around stabilizing the Beacon chain and watching different $ETH wrappers piece together.

Eth2 is a slow, iterative process and not one to be rushed.

https://twitter.com/VitalikButerin/status/1333569138522898435?s=20

For those watching from the sidelines, don't expect anything monumental to happen overnight.

But, one day you will wake up and Ethereum as we know it will be on a whole new level.

When this happens, network congestion and $10+ transactions will be a thing of the past.

It will not be without growing pains, but it's a sign that web3 is ready to take on its next major challenge.

I commend all the galaxy brains dedicating their livelihood to this upgrade, and look forward to breaking down the pieces for the layman along the way.

In the meantime, stay up with Eth2 at ethereum.org/en/eth2/

When your friends ask, tell them Ethereum is undergoing a technical challenge never before seen by mankind, and one that sets the stage for the digital future we've all dreamed of.

With that, welcome to #Serenity!