The massive overhaul of Ethereum known as a merge has finally taken place, moving the digital machinery from the heart of the second-largest cryptocurrency to a much more energy-efficient system after years of development and delays.
Changing the way of running a blockchain known as proof-of-work (PoW) to another called proof-of-stake (PoS) was no small feat. “The metaphor I use is this idea of changing the engine of a running car,” said Justin Drake, a researcher at the nonprofit Ethereum Foundation, who spoke with CoinDesk before the merger. “I like to think of it as a kind of switch from gas to electric.”
The payoff is potentially huge. Ethereum Development should now consume around 99.9% less energy. From an energy cost standpoint, it’s as if Finland suddenly turned off its power grid, according to one estimate .
Ethereum developers claim that the update will make it more secure and scalable. This network contains a $60 billion ecosystem of cryptocurrency exchanges, lending companies, non-fungible token (NFT) markets, and other applications.
From the beginning it was thought that Ethereum would at some point switch to a proof-of-stake system. But the transition was a complicated technical challenge , something so risky that many doubted it would happen.
By the time the merger officially began at 2:43 a.m. Eastern Time (EST), over 41,000 people joined on YouTube for the “Ethereum Mainnet Merge Watch Party.” . They watched with bated breath as key metrics moved smoothly to suggest that Ethereum’s core systems had remained intact. After a long 15 minutes, the merger was officially finished , which could be declared a success.
The upgrade, which ends the network’s reliance on the energy-consuming process of mining cryptocurrencies, has been closely watched by investors, enthusiasts and skeptics alike given the impact it is expected to have on the broader blockchain industry.
Mark Cuban, investor and billionaire owner of the Dallas Mavericks basketball team, told CoinDesk that he would be “watching [the merger] with interest like everyone else,” noting that it could make ETH, the network’s native token, become deflationary .
In the minutes following the merger, ETC — whose current market value of close to $200 billion makes it the second-largest cryptocurrency after bitcoin (BTC) — traded at $1,632, down around 0.4% in the previous 24 hours.
The complexity of the update was increased by the fact that it may have been one of the biggest open source software challenges in history, requiring the coordination of dozens of teams, individual researchers, developers, and volunteers.
Tim Beiko, a developer at the Ethereum Foundation who played a major role in coordinating the upgrade, told CoinDesk: “I think the merger can really get people who were interested in Ethereum but were skeptical about the environmental impact come and experiment with it.”
goodbye miners
In 2008, Bitcoin introduced the world to the idea of a decentralized ledger: a single, immutable record of transactions that could be seen, altered, and trusted by computers around the world without the need for intermediaries.
Ethereum, introduced in 2015, expanded on the basics of Bitcoin with smart contracts, or computer programs that effectively use the blockchain as a global supercomputer, recording information on its network. That innovation was the essential ingredient behind decentralized finance (DeFi) and NFTs , the main catalysts for the most recent cryptocurrency boom.
The merger removes Ethereum’s proof-of-work system, in which cryptocurrency miners competed to write transactions to the ledger and were rewarded for doing so by solving cryptographic puzzles.
Most cryptocurrency mining takes place on “farms”, although it would be more appropriate to call them factories. Imagine giant warehouses with rows of computers stacked on top of each other, like bookshelves in a university library, each one boiling away as it strives to produce vast amounts of cryptocurrency.
It is this system, pioneered by Bitcoin, that has caused Ethereum to consume so much energy and become responsible for fueling the blockchain industry’s reputation as an environmental threat.
“My daughter and I talked about NFTs a few months ago,” recalled Ben Edgington, product lead at ConsenSys, the Ethereum research and development company. “During dinner, I awkwardly mentioned some NFT projects and she yelled at me: ‘How can you boil the oceans with this nonsense? It is awful. I can’t believe you make a living like this.’
Edgington, who began his career researching the weather before landing in the world of cryptocurrencies, understood why his daughter thought that. “I mean: It’s kind of hard to make a case for ‘adult stickers’ that emit, by some estimates, a megaton of [carbon dioxide] a week.
Hola, stakers
Ethereum’s new proof-of-stake system eliminates mining altogether.
Miners are replaced by validators; that is, people who stake at least 32 ETH by sending them to an Ethereum network address where they cannot be bought or sold.
These staked ETH tokens are like lottery tickets: the more ETH a validator stakes, the greater the chance their ticket will be drawn and give them the ability to write a “block” of transactions to the ledger. digital Ethereum.
In 2020 Ethereum introduced a proof-of-stake network called the Beacon Chain, but until the merger it was just a staging area for validators to prepare for the change. The transition to a PoS system involved the merger of Beacon Chain with the Ethereum mainnet.
According to Beiko, the energy consumption in the PoS system “is not even a rounding error in terms of environmental impact”.
“PoS is like running an app on your MacBook,” he said. “It’s like running Slack. It’s like using Google Chrome or Netflix. Obviously, your MacBook plugs into the wall and uses electricity to run. But nobody thinks about the environmental impact of using Slack, right Blockchain Development
