The historic upgrade put aside the miners who had previously driven the blockchain, with promises of massive environmental benefits.
The massive overhaul of Ethereum called the Merge eventually happened, thereby moving the digital machinery at the core of the second-largest digital currency by market value to an energy-efficient system after a lot of efforts and years of development and delay.
It was not an easy task to swap out one way of running a blockchain called Proof-of-Stake. The payoff is significantly gigantic. Ethereum tends to consume 99.9% or even lesser than that. It’s just like Finland, which has suddenly closed its power grid, according to an estimate.
According to Ethereum’s developers, the upgrade will make the network, which houses around a $60 billion ecosystem of crypto exchanges, lending firms, NFT (non-fungible token) marketplaces, and other apps. It is more scalable and secure as well.
When the Merge kicked in at 6:43 am UTC, more than 41,000 people were tuned in on YT to an “Ethereum Mainnet Merge Viewing Party.” They watched with excitement as key metrics trickled in, which suggests that Ethereum’s main systems were still intact.
The Merge was officially finalized, after about 15 long minutes, meaning it could be declared a great success. The price of ETH, whose market value is near $200 billion, makes it a great digital currency, considered the second largest cryptocurrency after bitcoin (BTC), which is largely flat after the Merge.
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This update of Ethereum ends the network’s dependence on the energy-intensive process of crypto mining, which has been closely watched by crypto investors, skeptics, and enthusiasts for the impact it is expected to have on the vast blockchain industry.
The owner of the Dallas Mavericks basketball team, Mark Cuban, who is a great investor said that he would be excited and watch the Merge with great interest like everyone else. Moreover, he pointed out that he might make Ethereum the network’s native token.
This idea was from the start that Ethereum would finally turn into PoS. However, this transition was hard to implement and needed much complicated technical effort, an endeavour that is so risky that one may doubt it would happen at all.
The Merge’s complexity could be seen by the fact that it may have been the largest open-source software endeavour in history, requiring coordination across dozens of teams and scores of individual researchers, volunteers, and developers.
It’s time to say Goodbye to miners.
Bitcoin introduced the idea of a decentralized ledger in the year 2008. It is a single, immutable record of transactions that computers worldwide could view, change, and trust without intermediaries.
Furthermore, Ethereum, introduced in 2015, expanded upon the main concepts of Bitcoin with smart contracts that effectively use the blockchain as a supercomputer, recording data onto its network.
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This innovation was the main ingredient behind NFTs, DeFi, and the main catalysts of the most recent crypto boom.
This Merge discards the POW system of Ethereum, where crypto miners compete to write transactions to its ledger and earn great rewards for solving cryptographic puzzles.
This mining system introduced by Bitcoin caused Ethereum to consume so much energy. It fuels the blockchain sector’s reputation as an environmental menace.
The Stakers
The new system of Ethereum after the Merge, that is, POS, discards the mining entirely. So, Miners are supposed to be replaced by the Validators, that is, people who stake at least 32 Ethereum and earn.
This staking system is similar to the lottery system where the more Ethereum a validator stakes, the more his chances to draw one of its tickets, thereby giving it the ability to write a “block” of transactions to the digital ledger of Ethereum’s digital ledger. The Merge involved the merging of the Beacon chain with Ethereum’s network.
New incentives
Instead of being a single piece of open-source software, the Ethereum network is considered a nation-state which is a sort of living organism that comes together when many computers talk to each other in the same language, all following the same rules
This Merge introduces a new set of incentives for people using these computers. PoW is a system by which you consider physical resources and convert them into security for the network.
If you want to secure the network, you need more resources. On PoS, we need to use financial resources to convert them to security.
Ethereum’s Merge is one of the most ambitious and difficult tasks in the blockchain industry, with the potential to bring revolution to the decentralized network.
Ethereum has already gone through various changes. Unlike “Digital Gold,” this protocol is regularly updated to meet global demand and improve decentralization and security.
Trading the Merge
The Merge has become a topic of speculation over the past few months, with traders who initially view the event as a catalyst for a brighter future. The market for Ethereum started pricing in post-Merge gains, a welcome respite following the crash in the crypto-asset markets this year.
Generally, it is nearly impossible to predict exactly how the markets will react to this successful Merge. Since its inception, the upgrade has been on Ethereum’s roadmap, so it may have already, by and large, been priced in by the market.
What’s next?
Fortunately, this Merge is a great step in Ethereum’s big journey toward a successful and more mature system, however, there are still steps left to go, said Vitalik Buterin.
Further, he mentioned Ethereum’s relatively high fees and slow speeds, which are still not addressed by the update and remain a barrier to growing the network’s user base.
Wrapping up
Undoubtedly, the Merge comes with great benefits. In summary,
- It is a game-theoretic change of network validators (staker vs. miner).
- Ether is becoming a productive asset.
- Decrease in Ether issuance for block producers
- A drastic decrease in network energy consumption was a barrier from an ESG perspective.
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