The Merge. It was all crypto enthusiasts, especially Ethereum users, could think and talk about. The transition from a proof-of-work (PoW) system to a proof-of-stake (PoS) protocol and how it would affect those involved brought predictions and speculations.
On the 15th of September, the Merge was complete. After years of putting off the much-needed transition, Ethereum (ETH) mainnet merged with the Beacon Chain, finally becoming a proof-of-stake blockchain. While more than half of the world slept, the change happened without significant disruptions.
Now that the big date has come and gone, how will it impact electricity and boost investment for investors?
A Greener Ethereum (ETH)
Previously, Ethereum was one of the blockchains that relied on mining to validate and confirm transactions on the chain.
This was important to prevent double-spending and boost the security of transactions. However, mining requires high-grade computing power for operation. With thousands of validators utilizing immense computing power, the energy sapped shot through the roof, and carbon emissions drew concerns from environment-protection agencies.
The Merge saw Ethereum’s electricity use reduce by 99.5%, a staggering amount from the previous consumption that could power cities.
Experts speculate that transitioning from Proof-of-Work to the Proof-of-Stake model will lower market inflation. The energy-efficient process and carbon-negative movement will also push for global crypto adoption.
The Merge: Benefit For Investors
For Ether holders- at least the ones with enough ETH- the best advantage of the Merge is its stable yield source. Any holder with at least 32 Ether can lend their coins to the blockchain and become a validator, earning 5 – 10% on their staked coins.
The financial incentives appeal to institutional investors, and companies allowing investors to pool their tokens have begun leaning heavier towards ETH.
While the price of Ethereum along the line determines the yield, it might prove to be a wise investment for long-term investors since the market isn’t bending in the coin’s favor at this point.
On the other hand, Ethereum miners got the stick’s short end. Short enough that many of them have jumped ship to other altcoins, with their services no longer needed to secure the network. With losses piling up, Ethereum Classic, Ravecoin, and other PoW chains are witnessing an unexpected influx of potential miners.
Ethereum- Post Merge
While the new system brings a better way of earning for investors and greener activities, some things are still the same. The cost of transactions and congestion associated with the blockchain is not expected to change, unlike the assumptions made by some users.
In terms of security, Ethereum will maintain its stance as it would require gaining 51% control of the blockchain to carry out malicious attacks. Even better, stakers who validate nefarious transactions will have their stake slashed. The “financial punishment” will make it harder for misdemeanors to plunge Ethereum under a 51% attack.
However, staking rewards earned on the Beacon chain will be inaccessible until six to twelve months after the Shanghai upgrade is completed.
The upgrade is the next big thing on every Ethereum core developer’s mind, as over 21 billion worth of ETH will remain locked until the withdrawal feature- aided by Shanghai, is added.
Other rumored plans for Ethereum include a feature called proto-danksharding, which is the rollups scalability solution. If implemented, the tools will address the congestion problem and issue of exorbitant fees on the network. The Merge was the crossing over; now, Ethereum 2.0 can finally begin.