What is the Beacon Chain?

What Is the Beacon Chain?

Released in December 2020, as the first phase of the Serenity upgrade, the Beacon chain is a new blockchain that introduces an alternative consensus model, Proof of Stake (PoS), to the Ethereum network. An alternative to the more popular but disadvantageous Proof of Work (PoW) consensus mechanism, PoS replaces the need for computational power with staked coins.

The Beacon chain introduced this mechanism to the Ethereum network to solve its major issues and improve the network. Currently, the beacon chain runs parallel to the original Ethereum blockchain from 2015.

It acts as a record of accounts that manage and oversee the network of stakers and the processes involved in validating blocks. The beacon chain is responsible for randomly selecting validators, handing out rewards to successful validators, creating new blocks, and penalizing malicious actors.

Keep in mind, however, that the Beacon chain does not support transactions or smart contracts for now. It does not interfere with transactions made on the Ethereum blockchain; users are free to exchange tokens using their wallets, use dApps and carry out their normal activities on the blockchain.

Why Was the Beacon Chain Created?

The Beacon chain was created to solve the three major problems posed by the PoW model being used by the Ethereum network: Sustainability, Security, and Scalability.

Sustainability

The Proof of Work (PoW) consensus model, popularly used by coins like bitcoins, is supported heavily by miners who spend time and computational energy mining blocks and broadcasting it. As such, the model poses a significant threat to the environment. The beacon chain proffers a solution to this problem with its PoS consensus model. When the beacon chain and the main Ethereum network are merged in the future, the Ethereum network will function solely on the PoS model, significantly reducing the network’s carbon footprint.

Security

The proof of stake consensus model is more secure because it discourages the centralization of the network. The PoW model allows room for mining pools. This is a group of miners who combine their computational power to solve hashes and share the rewards. These pools also give room for malicious actors to put together their mining pools and attempt control of the network to carry out a 51% attack. The PoS model, on the other hand, chooses validators randomly, which facilitates the decentralization of the network and reduces the chances of a 51% attack. Additionally, a malicious actor stands the chance of his stake being slashed if the beacon chain detects malicious activity.

Scalability

Perhaps the biggest issue the Ethereum network faces is scalability, the ability of a network to process multiple transactions at once. Currently, with the PoW consensus model, the Ethereum network processes merely 30 transactions per second. However, with the introduction of the PoS mechanism and, eventually, shard chains, Ethereum, at the end of the Serenity Upgrade, will be able to process up to 100,000 transactions each second.

The Beacon Chain’s Role in the ETH 2.0 Roadmap

The Beacon chain was merely a phase in the proposed solution to the main problems with the Ethereum network explained above. The entire plan is referred to as the Ethereum 2.0 or Serenity upgrade. Ethereum 2.0 is a proposed upgrade with several phases that introduce new features designed to better the functionality and security of the Ethereum network. The Ethereum 2.0 roadmap includes three phases: Phase 0, Phase 1/1.5, and Phase 2

The first phase ushers in the beacon chain. The beacon chain was released in 2020 because it stands as the foundation on which the rest of the phases will stand. Without the beacon chain introducing the new consensus model, the shard chains and the merge cannot be incorporated.

The next phase of the Ethereum roadmap, Phase 1.0, the Merge, will see the beacon chain and the Ethereum main net joining together to become one blockchain backed by the PoS consensus model. This merge will solve Ethereum’s problems with security and sustainability.

After that, shard chains will be implemented, solving the scalability problem and allowing the Ethereum network to process multiple transactions in less time.

How Does the Beacon Chain Differ From the Ethereum Mainnet?

As mentioned earlier, the beacon chain does not interrupt user activities on the Ethereum blockchain; instead, it runs beside it as a separate chain with its very own consensus model. What then sets the two chains apart? Apart from the consensus model, which is at the heart of the structure, the beacon chain has some unique features.

One such feature is the method used to select validators. The Beacon chain, which collects details on all registered validators on the blockchain, randomly selects validators to validate blocks on the chain. This eliminates the need for miners to compete against each other to be the first and fastest miner to hash the block.

Additionally, for additional security, the beacon chain organizes a committee of 128 validators who oversee the actions of other validators. This second check makes it easier for the beacon chain to discover malicious actors.

How Can You Interact With the Beacon Chain?

For now, the beacon chain does not support smart contracts or Ethereum transactions. As such, everyday crypto users may not interact with the beacon chain at all until the Merge. Nevertheless, for crypto users looking to become validators on the beacon chain, here’s what you should know.

First, to become a validator on the beacon chain, one must stake up to 32 ETH. In return for staking cryptocurrency and contributing to validate blocks on the chain, stakers will receive rewards in the form of transaction fees. However, the fees will depend on how much of their cryptocurrency they have staked.

Depositing the ETH activates a validator software that stakers will use to store data, create blocks, and process transactions. Different staking options are available to better suit stakers with preferences on rewards and the amount they feel comfortable staking.

Secondly, the beacon chain comprises two types of validators; Attesters and Proposers. While the latter create blocks, attesters guarantee the validity of the block by voting for it. If the attestor notices that a proposer has turned in an invalid transaction, they can report that proposer for malicious actions.

Conclusion

Looking forward, the future of the beacon chain and the Serenity Upgrade as a whole appears to be very bright. Nearly two years after the official release of the beacon chain, It has finally been announced that the merge is coming on September 19th, 2022.

Finally, on or around the proposed date, the Ethereum network will transition to a Proof of Stake consensus mechanism, setting the tone for the final phase of the Serenity Upgrade. None of the remaining phases would be able to stand without the Beacon chain.