In an interesting development, Ethereum co-founder Vitalik Buterin revealed in a tweet thread on Oct 05 that the Eth2 roadmap is getting an update and the scaling improvements might arrive sooner than previously anticipated. The relatively new concept is called “rollups” and it will be combined with sharding to create a synergistic effect to turbo-charge the Ethereum network capacity.
Vitalik Buterin squashed the rumors that sharding was being cancelled for Ethereum 2.0 upgrade, because of the complexity and increasing delays. The suggested rollups can arrive by deployment of Ethereum 2.0 Phase 1 (introduction of sharding and data storage on shards without transaction processing). They can increase the existing 15-45 TPS capacity to 1000-4000 TPS – a 100x increase!
They would work, Vitalik argued, because even though sharded applications require fully deployed Ethereum 2.0 upgrade. The same isn’t true for sharded rollups, which can work effectively with only Ethereum 2.0 Phase 1, since rollups only need the chain for data storage and not computation.
Currently, we have ~15-45 TPS. Rollups offer a ~100x increase in throughput. Sharding offers a ~64x increase. These two stack multiplicatively; rollups *on top of* sharding offer a ~6400x (!!) increase in throughput.
So, rollups on top of sharding can eventually bring the Ethereum network capacity to 25,000-100,000 TPS – an increase of 6400x from this point. However, that itself is likely years away, but we might see the rollups in action as early as 2021.
So it's not "rollups instead of sharding", it's "rollups on top of sharding". That said, rollups are already here or coming soon even before sharding, and rollups without sharding still offer that 100x increase in throughput. So get on a rollup today!
What Are Rollups?
A Rollup is essentially a Layer-2 scaling solution for blockchains. It’s a sidechain connected to a rather smaller “contract” on the mainnet. It allows for processing off-chain and only using the mainnet for final settlement, relieving network congestion and reducing processing time / fees.
About Ethereum 2.0
Ethereum 2.0 is the next big upgrade for the Ethereum network. It will bring Proof of Stake (POS), eWASM and sharding. It will reduce the resources, required to run the Ethereum network, as well as bring scalability and performance improvements.
The Eth2 upgrade will be implemented in three phases, with the first Phase 0 Beacon Chain, expected by the end of Q2 2020, which will introduce the staking facility. This will be followed by the Phase 1 in Q1 2021, which will introduce sharding and allow data to be stored on shards, however transactions can’t still be processed.
The Phase 2 will make the Ethereum 2.0 truly complete and the network operational, after its introduction at some point in 2022. It will bring the Ethereum WebAssembly (eWASM) replacing the now operational Ethereum Virtual Machine (EVM). Only after the Phase 2 has been rolled out, proper execution of smart contracts and transactions can commence on the new Eth2 chain. The Eth1 and Eth2 chain will gradually merge with each other.