What is the Beacon Chain?
The Beacon Chain was the first Proof of Stake (PoS) blockchain created in 2020 to test the validity of the consensus algorithm.
In the Proof of Stake consensus mechanism, individual nodes are chosen randomly to verify transactions by staking Ethereum. Participants receive a reward, typically a 1 %—10 % return, in exchange for staking their crypto to help run the blockchain.
It ran separately from the Ethereum Mainnet at first to confirm that the logic worked before being merged in 2022. Before that, Ethereum used a Proof of Work (PoW) consensus algorithm similar to Bitcoin.
The Beacon Chain was originally a chain of empty blocks and coordinated the network of Ethereum stakers before being used for actual Ethereum blocks. Once The Merge happened, Ethereum mining was discontinued, and block creation and consensus became the responsibility of the Beacon Chain.
From that point onwards, there was only one Ethereum blockchain, with the Beacon Chain acting as the consensus layer.
Functions of the Beacon Chain
“The Beacon Chain (and its underlying protocol) is in charge of enforcing consensus, among the nodes, called validators, participating in the network, on the state of the system.”
(Cassez et al., 2022).
The original function of the Beacon Chain was to test and verify that the Proof of Stake algorithm worked and could be used to replace Proof of Work on Ethereum.
It was its own blockchain of empty blocks, preparing the network of Ethereum stakers that would verify transactions once The Merge happened.
Once the Beacon Chain merged with Ethereum Mainnet, the blockchain was consolidated, and it now uses Proof of Stake as its consensus logic. The Beacon Chain is still Ethereum’s consensus layer, ensuring all nodes agree on the ledger’s state and handling rewards and penalties.
The consensus layer is separate from the execution layer, which processes transactions and smart contracts.
Impact of the Beacon Chain
The key impact of the Beacon Chain was moving Ethereum from Proof of Work (PoW) consensus to Proof of Stake (PoS).
This meant Ethereum mining was obsolete, and nodes would now need to stake Ethereum to earn rewards. Since nodes were randomly selected to verify Ethereum blocks, the blockchain became more efficient and increased its popularity.
Cassez, F., Fuller, J., Asgoankar, A. (2022). Formal Verification of the Ethereum 2.0 Beacon Chain, ConsenSys.
https://franck44.github.io/publications/papers/eth2-tacas-22.pdf
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