A smart-contract on the current Ethereum blockchain will allow validators to participate in the proof-of-stake protocol by taking deposits of exactly 32 eth.

When validators deposit into the smart-contract they are put into the pending validator set on the beacon chain. Eventually they become active validators and will participate in the proof-of-stake protocol.

The beacon chain generates a random number heartbeat, used to randomly sample validators for block proposal and voting duties. This random sampling is important as it stops validators colluding and influencing the system.

A problem with the previous design was that it required validators to submit a transaction per vote. These transactions would have exacerbated the current blockchain scalability issues by increasing load. The current chain would have become a bottleneck. In the new design, the beacon chain manages the proof-of-stake mechanism so transactions do not compete.

The beacon chain will not include an execution engine (like the EVM) because validators can only interact with the chain in a very limited way. No longer having to process votes using the EVM means voting is much more efficient. There is no arbitrary computation that needs to be metered so all beacon chain transactions will be gas free — making the whole process cost effective.