ETHEREUM 2.0 : The Merge & BTP
Greetings from the PARAMETA Team,
Today marked the first phase of the Ethereum 2.0 roadmap, the Merge, which changes Ethereum’s proof-of-stake from Proof-of-Work (PoW) to Proof-of-Stake (PoS).
One of the big milestones on the Ethereum roadmap, the Proof of Stake transition has been in the works since before Ethereum launched, and is expected to reduce the cost of fees on the Ethereum network, as well as reduce electricity consumption. Additionally, from a technical standpoint, block finality will be ensured, which will allow PARAMETA’s connection to the interchain protocol BTP (Blockchain Transmission Protocol) to be fully realized.
What is Finality?
Finality refers to the irreversible state in which transactions cannot be reversed or modified, meaning that the transaction history recorded in a node cannot be changed or invalidated. From a financial perspective, finality is a key rationale for transactions as it allows the payment and settlement system to operate normally even if a financial institution goes bankrupt. For the same reason, blockchains also need to secure the finality of blocks, which means that the transaction history cannot be canceled or changed, but in the case of the PoW method, there is a limit to the reliability of finality due to the difference in the consensus method.
Finality of PoW
In the PoW method, if multiple miners’ nodes create a block at the same time, even if node A creates a block first, the chain may diverge with node B, which created a block later, due to the difference in data transmission time between each node. The blockchain that becomes the longest chain faster becomes the main chain (the Longest Chain Rule), and if chain A becomes the main chain because it has the longest chain, chain B will be destroyed. As a result, transactions recorded on the B chain may be changed or invalidated, and it becomes difficult to ensure the finality of the block.
In order to prevent this phenomenon, PoW adopts a method that waits a certain number of blocks after confirming the transaction before finalizing the payment, but since Bitcoin provides only probabilistic finality 6 times (60 minutes = 10 minutes * 6 blocks) and Ethereum 25 times (14 seconds * 25 blocks) in the existing PoW method, there was an anxiety factor when applying BTP due to the possibility of roll back.In order to prevent this phenomenon, PoW adopts a method that waits a certain number of blocks after confirming the transaction before finalizing the payment, but since Bitcoin provides only probabilistic finality 6 times (60 minutes = 10 minutes * 6 blocks) and Ethereum 25 times (14 seconds * 25 blocks) in the existing PoW method, there was an anxiety factor when applying BTP due to the possibility of roll back.
Ethereum 2.0 & BTP
PoS creates a certain number of blocks in a certain interval by Validators, and when 2/3 of the Validators approve a certain block in this interval, the block is finalized and the transaction is guaranteed to have finality.
As Ethereum gains finality with this 2.0 update, BTP is also preparing to connect to Ethereum in earnest. BTP is an interchain protocol that can connect not only homogeneous blockchains but also heterogeneous blockchains such as ETH, BNB, and DOT as long as they support smart contracts, and we plan to develop the connection by optimizing it for the changed consensus algorithm as a result of the successful upgrade of Ethereum 2.0.
In the future, BTP will be commercialized through ‘HAVAH’, which is currently being developed based on PARAMETA’s ‘Parameta Framework’, and ‘ICON’, which PARAMETA is providing technical support for as a tech company, to complete the vision of Hyperconnect the World by creating a world where services can be freely used regardless of chain by connecting multiple chains.