The Ethereum Foundation has announced Wednesday the official date for the most-awaited Merge to a proof-of-stake consensus mechanism. This article is all about Ethereum 2.0 and what could be the implications of the Ethereum merge. Let’s take a look at it in more detail.
What is Ethereum Merge?
The Ethereum Merge illustrates the conversion of the consensus mechanism for validating transactions in the Ethereum network from Proof-of-Work to Proof-of-Stake. The Ethereum Blockchain should enact quicker and more efficiently after this merge. The scalability of Ethereum and the performance of its smart contracts should be tremendously enhanced.
The Ethereum Merge is an extremely complex procedure that has been jogging on Ethereum for more than a year now. This is also named Update Ethereum 2.0. The update includes some tedious steps to transition the entire network to the modern consensus mechanism. According to the official announcement, the official date of the Bellatrix upgrade, which initiates the last countdown, is designated to operate on Sept. 6. The Merge will be completed at some time Sept. 10-20. The following are the highlights of the merge
- Ethereum is switching to proof-of-stake! The change, called The Merge, must first be triggered on the Beacon Chain with the Bellatrix upgrade. After this, the proof-of-work chain will relocate to proof-of-stake upon striking a distinctive Total Difficulty value.
- The Bellatrix upgrade is planned for epoch 144896 on the Beacon Chain – 11:34:47am UTC on Sept 6, 2022.
- The Terminal Total Difficulty value triggering The Merge is 58750000000000000000000, predicted between Sept 10-20, 2022.
What are the effects of the Ethereum merge?
The Ethereum Merge could have a great deal of influence on the Ethereum network and also on the crypto market in the forthcoming weeks and months.
Faster transaction speeds
With the Ethereum Merge and the switch to Proof-of-Stake, the Ethereum network will become much speedy. Slow transaction speeds have long been a concern with Ethereum. Now, after the merge, the average speed in the network should grow massively.
Appreciation of Ether Tokens
With the switch to proof-of-stake, the issuance of ether tokens will decline in the coming months. This indicates that the value of the ether token should rise with it. We could notice some deflationary movements. An upsurge in the price of ether looks possible in the coming months.
Lower power consumption
The power consumption of the Ethereum network should decrease greatly with the PoS. This also confirms that environmental cordiality continues to grow. This is a special advantage of proof-of-stake, which could support Ethereum’s prominence.
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Will the Ethereum Merge push a price growth?
In the coming weeks, investors are eagerly awaiting whether they could witness a rise or a fall in the Ethereum price in the wake of the Ethereum Merge. In the last few days, the Ether price has dropped again after strong gains in the past few weeks. Normally, “rumors” and anxiety before a critical event push prices higher. But when the realities about an event are shown, or when the event happens, sales often occur. Hence, it is quite challenging to forecast how the Ether price will grow over the next few weeks. A lot also relies on the macro developments in the market.
Ethereum had to handle the issues in order not to slip behind the current blockchains. Due to its pioneering role in smart contracts, Ethereum continues to be a head in NFTs and DeFi. Yet, blockchains such as Solana and Terra are huge rivals of the Ethereum blockchain.
In addition to other miniature advancements, Ethereum 2.0 has one vital job in particular: the switch from Proof of Work to Proof of Stake. This transformation has taken place over the last few months via different upgrades that Proof of Stake was to present step by step.
There are approximately 3 phases in the evolution of Ethereum 2.0:
- Phase 0: Ethereum created the so-called Beacon Chain, which is entirely founded on the Proof-of-Stake consensus mechanism.
- Phase 1: So-called shard chains started. These are different blockchains contained via the Beacon Chain.
- Phase 2: The old Ethereum 1 Chain is connected to the new Beacon Chain (Ethereum 2.0 Merge)
Post-Merge: Could Ethereum Miners Fork Successfully?
In the past, transactions were validated by utilizing the proof-of-work consensus mechanism. This is the same mechanism as Bitcoin. The “work” that a miner accomplishes specifies the number of transactions that he can validate.
This confirmed that the miners, who have extremely high computing power, were capable to validate many transactions and therefore gain high rewards in the form of ether tokens. As rewards declined and transactions became more complicated to validate, this “power” became increasingly centralized in a few Ethereum miners. The transformation to proof-of-stake means that these miners now have to reorient themselves.
Theoretically, the Ethereum miners have few chances after the changeover. After the merge, these are theoretically without result. The miners, therefore, profited from the fact that the transformation had been massively stalled in the last few weeks and months. This is how some miners were able to adjust. There is still a chance that these can become validators for the staking process. Because they usually have many ether tokens.
Another option is a fork brought out by frustrated miners. Ethereum Classic is also a network that was earlier broken off from the Ethereum Mainnet. There is a small chance that frustrated miners will organize and force an Ethereum fork.
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