Ethereum merge completed.World’s Second Largest Blockchain Enters New Golden Era

After years of development and delays, Ethereum’s major redesign, known as Merge, has finally arrived, transforming the digital machine at the heart of the second largest cryptocurrency into a system that uses significantly less energy. migrated.

Switching from proof-of-work to proof-of-stake, two different ways of operating a blockchain, was no easy task. According to Justin Drake, a researcher at the philanthropic Ethereum Foundation, “The metaphor I use is this idea of ​​switching engines from a running car.” I compare it to going from gasoline to electric. I like

The potential rewards are huge. Now Ethereum he should use 99.9% less energy. In terms of energy costs, one evaluation compares Finland to an abrupt shutdown of the grid.

According to Ethereum developers, the network that supports a $60 billion ecosystem of cryptocurrency exchanges, lending institutions, non-fungible token (NFT) marketplaces, and other apps will become more secure and scalable.

The assumption that Ethereum, the second largest cryptocurrency after Bitcoin (BTC), would eventually make this transition has existed from the beginning. The current market value of its Ether (ETH) token is close to $200 billion. However, the transition required a difficult technical effort, was extremely dangerous, and many wondered if it would be successful. There are parts that I’m not fully aware of,” he admitted. “I’ve trained myself to expect that to happen in the future, so I’m somewhat in denial.

Over 41,000 individuals watched the “Ethereum Mainnet Merge Viewing Party” on YouTube when the merge officially kicked off at 2:43 AM EST. Operators of Ethereum’s new proof-of-stake network, known as validators, are breathing in important metrics that show they are doing what they expect and adding new transactions to the blockchain ledger. Observed cut off. The merge was “done” after about 15 minutes of hard work, at which point it could be considered officially successful.

Cryptocurrency investors, enthusiasts, and skeptics have been eagerly awaiting updates to reduce the network’s reliance on the resource-intensive process of cryptocurrency mining, due to the effects it expects to have on the larger blockchain sector. I got

“We’ll see,” said Mark Cuban, owner and investor of the Dallas Mavericks. [the Merge] Just as curious as everyone else,” he pointed out, which would cause a contraction of ETH.
ETH traded at $1,594 immediately after the merger, down about 0.81% over the past 24 hours.

The fact that the update could have been one of the largest open source software projects in history, and the collaboration required between dozens of teams and hundreds of individual academics, developers and volunteers Facts add to the complexity.

“I think Merge will allow people who are interested in Ethereum but skeptical about its environmental impact to really try Ethereum,” said Ethereum, which played a key role in organizing the update. Foundation developer Tim Beiko said:

goodbye miners

A distributed ledger, or a single immutable record of transactions that can be read, edited, and trusted by computers around the world without the need for an intermediary, was first proposed by Bitcoin in 2008. As a global supercomputer that records data on a network, it builds on the basic idea of ​​Bitcoin, which was announced in 2015 using smart contracts, or computer programs that effectively leverage the blockchain. his Ethereum. Decentralized finance (DeFi) and NFTs, key drivers of the recent cryptocurrency bubble, were made possible by this breakthrough.

As a result of The Merge, Ethereum’s proof-of-work system, which included cryptocurrency miners competing to add transactions to the ledger and earning incentives for cracking the code, has fallen into disuse. rice field.
Most cryptocurrency mining is currently done on “farms,” but factories may be more appropriate. Imagine a huge warehouse filled with rows of computers stacked like bookshelves in a college library.

This method, invented by Bitcoin, is what caused Ethereum to consume so much energy and is responsible for the image of the blockchain industry as a threat to the environment.

“My daughter and I had a conversation about NFTs a few months ago,” said Ben Edgington, product lead at Ethereum R&D firm ConsenSys. She yelled at me when I carelessly brought up about her NFT efforts at the dinner table. This is terrible. I find it hard to believe that you do this for a living.

Edgington, who started her career researching climate science before moving into the crypto industry, recognized her daughter’s perspective.She undoubtedly ingested a highly toxic environmental story, he argued. [carbon dioxide] every week.

welcome, staker

The new Proof of Stake Ethereum protocol eliminates mining entirely. A validator who “bets” at least 32 ETH on an address on the Ethereum network that cannot be bought or sold replaces a miner. Similar to the lottery, these staked ETH tokens: the possibility that a validator can select his one of the tickets and add a “block” of transactions to his Ethereum digital ledger depends on the amount of ETH to bet. increase accordingly.

The Beacon Chain, the proof-of-stake network that Ethereum launched in 2020, served only as a staging place for validators to prepare for the switch until the merge. For Ethereum to switch to Proof of Stake, the Beacon Chain and Ethereum’s main network have been combined.

Regarding environmental impact, Beiko claims that using energy proof stakes is “not even a rounding error.”

According to him, “Proof of Stake is like running an app on your MacBook.” Similar to using Slack. This is similar to using Netflix or Google Chrome. Of course, your MacBook needs electricity to function, so you plug it in and use it. But no one considers the impact his Slack has on the environment, right?

The benefit of the Merge upgrade that personally excites Edgington the most, he said, is the environmental impact. “Looking back, I am very proud to say that I helped remove one megatonne of carbon dioxide from the environment every week. He said.

better incentives

The Ethereum network is understood more as a nation than as a single piece of open source software. It is a kind of organism that forms when a large number of computers communicate with each other in a common language and all follow the same set of laws.

With the help of Ethereum’s new architecture, these computers have new incentives to operate by the rules and protect the ledger from unauthorized manipulation. “Proof of work is a mechanism that translates physical resources into network security. More physical resources are needed to make networks more secure,” he said. When it comes to Proof of Stake, we convert money resources into security.

Even when Ethereum’s proof-of-work network was operated and secured by thousands of individual miners, a network where machines from just three mining pools were indicative of all miners’ combined processing power. controlled a large part of the hashrate of

The so-called 51% attack could occur if a handful of Ethereum’s largest mining companies banded together to harvest a large portion of the network’s hashrate, making it difficult or impossible for anyone else to update their ledgers. It must have been.

With Proof of Stake, power on the network is determined by the amount of ETH you stake, rather than the amount of energy you use. Proponents of Proof of Stake argue that this makes the attack more expensive and wasteful, as the attacker risks reducing his staked ETH in retaliation for trying to disrupt the network. increase. Not everyone believes the buzz around Proof of Stake. For example, there is no indication that the more proven and secure approach Proof of Work will be removed from Bitcoin.

While the handful of publicly traded mining syndicates will no longer hold a disproportionate amount of power on the Ethereum network, critics argue that existing power players will simply be replaced by new ones. increase. In Ethereum’s proof-of-stake chain, Lido, a kind of community-run validator collective, holds more than 30% of his stake. A further 30% of network ownership is held by the three largest cryptocurrency exchanges, Coinbase, Kraken, and Binance.

Prominent cryptocurrency miner Chandler Guo said he will build a fork of Ethereum’s old proof-of-work chain in preparation for the merge. System in response to skepticism about Proof of Stake.
Proof-of-work forks have typically been derided as sideshows and scams by Ethereum core developers, but Guo’s “ETHPOW” effort and similar efforts have seen some progress in some crypto communities. has achieved

merge trader

Since at least mid-July, traders have been speculating about a merger in the cryptocurrency market. Initially, they thought this event would spur a sharp rise in the price of his ETH. Following the digital asset market meltdown earlier this year, the ETH options market has begun to price post-merger gains.

A possible fork of the Ethereum blockchain by enraged cryptocurrency miners has sparked a new wave of activity. This time, as traders flocked to lock value from the hypothetical airdrop of the new ‘ETHPOW’ token.

It is generally impossible to accurately predict the market reaction to a successful merger. Ethereum had the upgrade planned from the beginning, so the market may already have it included in the price. Kevin Zhou of Galois Capital said: Currently there is a market split of around 70/30 in favor of this being a good development for ETH.

What’s next?

Ethereum co-creator Vitalik Buterin commented on Merge in a live webcast, stating: This update didn’t address Ethereum’s relatively high fees and slow speeds. This, like environmental concerns in the past, is a barrier to expanding the user base.

Sharding is one of the next stages of the network that Buterin described. This technique helps ameliorate the network’s slow transaction speeds and high tolls by distributing transactions over “shards”, similar to adding lanes to a highway.

This upgrade was originally planned at the same time as the switch to Proof of Stake, but was deprioritized as a type of 3rd party solution, Success Rollup, was addressing some of the same issues. . The rollup hints at a key Ethereum development direction for community solutions to enhance the functionality of the chain, as opposed to updating the chain’s core code.

Even with Ethereum’s environmental issues behind it now, the network still faces some challenges if it wants to grow its user base. It’s hard to imagine not taking a few days off to celebrate our carbon footprint.

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