The long-awaited Ethereum Merge has arrived!
Investors, business analysts, industry stakeholders, and skeptics all waited with bated breath for Ethereum's transition from a PoW consensus mechanism to a more energy-efficient PoS model, which ShapeShift founder Erik Voorhees described in a tweet as the most consequential event in cryptocurrency history since the release of the Bitcoin whitepaper. More than 41,000 people watched the "Ethereum Mainnet Merge Party" live event on YouTube and saw when the merge was finally completed in the early hours of September 15, at around 1:40 a.m. EST.
“And we finalized! Happy merge all. This is a big moment for the Ethereum ecosystem. Everyone who helped make the merge happen should feel very proud today,” Ethereum co-founder Vitalik Buterin wrote on his Twitter page following the Merge.
The Merge Ushers in a Greener Ethereum
The main takeaway from the Merge is that the blockchain has transitioned from the PoW model, which involved the use of miners to validate transactions and secure the network, to the PoS consensus, which uses stakers in transaction validation and network security. Because the mining process that was used when the network operated on a PoW model will no longer be used, energy consumption will be reduced by an unprecedented amount. The need for energy-intensive computers will be effectively removed.
Following the merge, the Crypto Carbon Ratings Institute (CCRI) reported that Ethereum's energy consumption was reduced by a whopping 99.99%, as was the network's carbon footprint. To back up CCRI's reports, Alex de Vries' Digiconomist, a company known for its Electricity Consumption indices, estimates that the energy saved under this new blockchain consensus would be 99.98%, transforming the network into what many refer to as a "Green Ethereum."
Five Misconceptions about the Ethereum Merge
While this development has erupted the crypto space and become the clout of the day, and for many weeks to come, a lot of people are left with more doubts and questions than excitement and solutions. Here's a list of some common misconceptions following the merge that you should be aware of so you don't get caught off guard;
Gas fees will be immediately reduced following the Merge
When considering an Ethereum update, the first thing that comes to mind is a reduction in the strangling gas fees. Unfortunately, this is arguably the most common misconception among investors about the merge.
On the bright side, Ethereum developers are working to improve network throughput by implementing the "roll-up centric ethereum roadmap" in order to make gas fees more affordable.
The Merge will immediately affect the price of ETH
Another area of speculation has been the effect of the merge on Ethereum price. Some predicted that the price would dip due to possible technical issues or negative market sentiment, which would have resulted in massive ethereum withdrawals before or during the merge completion. Others anticipated that the price would immediately spike and earn them a quick profit.
Neither has been the case, as the price has not witnessed any significant change. There was a slight decline in the hours following the merge, but there has since been a price correction and the asset increased by about 2-3% in the last 24 hours, according to CoinMarketCap.
Blockchain transactions will be way faster.
The Ethereum blockchain is quite active, with DApps and other use cases keeping the network busy and large transactions being processed by the second.
Following the merge, transactions are about 10% faster, implying that it now takes 12 seconds for a new block to be added to the chain. This is only a slight improvement over the mainnet's block time of 13.3 seconds, and users may not even be able to tell the difference.
Anyone can be a validator under the new PoS model.
Staking is the foundation of the PoS consensus model, so those who want to be transaction validators in this new iteration of Ethereum must have at least 32 ETH locked away.
Besides, while the minimum amount of ethereum required to become a validator is 32 ETH, this does not guarantee that a validator will be chosen for transactions, as more staked ETH increases a validator's chances of being chosen by the system to validate transactions for a reward. Moreover, while supercomputers are no longer required, there are still some basic hardware requirements.
Staked ETH can be withdrawn after the Merge
Before the merge was completed, investors who intended to become validators began to stake their ethereum, and validators now have staked ETH (stETH), a cryptocurrency backed 1:1 by Ether (ETH) that is locked on the Beacon chain and has no withdrawal option.
The staked ETH withdrawal option is expected to be available in another scheduled Ethereum network update following the merge, known as the Shanghai update, which could take 6-12 months or more.
Read Also: NFT Consulting Firms: Here is Everything You Should Know
Bottom Line
It's safe to say that the merge was a success, and the Ethereum developers, engineers, and team should be commended for pulling off such a feat with almost no recorded hitches. The true success of the update will be tested in the coming months, and there is much to look forward to with more updates on the way that promises to improve scalability, speed, and security.
Storing your cryptocurrencies in online wallets, exchanges and software wallets exposes you to risks of being hacked. Consider storing them in a hardware wallet today
The long-awaited Ethereum Merge has arrived!
Investors, business analysts, industry stakeholders, and skeptics all waited with bated breath for Ethereum's transition from a PoW consensus mechanism to a more energy-efficient PoS model, which ShapeShift founder Erik Voorhees described in a tweet as the most consequential event in cryptocurrency history since the release of the Bitcoin whitepaper. More than 41,000 people watched the "Ethereum Mainnet Merge Party" live event on YouTube and saw when the merge was finally completed in the early hours of September 15, at around 1:40 a.m. EST.
“And we finalized! Happy merge all. This is a big moment for the Ethereum ecosystem. Everyone who helped make the merge happen should feel very proud today,” Ethereum co-founder Vitalik Buterin wrote on his Twitter page following the Merge.
The Merge Ushers in a Greener Ethereum The main takeaway from the Merge is that the blockchain has transitioned from the PoW model, which involved the use of miners to validate transactions and secure the network, to the PoS consensus, which uses stakers in transaction validation and network security. Because the mining process that was used when the network operated on a PoW model will no longer be used, energy consumption will be reduced by an unprecedented amount. The need for energy-intensive computers will be effectively removed.
Following the merge, the Crypto Carbon Ratings Institute (CCRI) reported that Ethereum's energy consumption was reduced by a whopping 99.99%, as was the network's carbon footprint. To back up CCRI's reports, Alex de Vries' Digiconomist, a company known for its Electricity Consumption indices, estimates that the energy saved under this new blockchain consensus would be 99.98%, transforming the network into what many refer to as a "Green Ethereum."
Five Misconceptions about the Ethereum Merge
While this development has erupted the crypto space and become the clout of the day, and for many weeks to come, a lot of people are left with more doubts and questions than excitement and solutions. Here's a list of some common misconceptions following the merge that you should be aware of so you don't get caught off guard;
Gas fees will be immediately reduced following the Merge
When considering an Ethereum update, the first thing that comes to mind is a reduction in the strangling gas fees. Unfortunately, this is arguably the most common misconception among investors about the merge.
On the bright side, Ethereum developers are working to improve network throughput by implementing the "roll-up centric ethereum roadmap" in order to make gas fees more affordable.
The Merge will immediately affect the price of ETH
Another area of speculation has been the effect of the merge on Ethereum price. Some predicted that the price would dip due to possible technical issues or negative market sentiment, which would have resulted in massive ethereum withdrawals before or during the merge completion. Others anticipated that the price would immediately spike and earn them a quick profit.
Neither has been the case, as the price has not witnessed any significant change. There was a slight decline in the hours following the merge, but there has since been a price correction and the asset increased by about 2-3% in the last 24 hours, according to CoinMarketCap.
Blockchain transactions will be way faster.
The Ethereum blockchain is quite active, with DApps and other use cases keeping the network busy and large transactions being processed by the second.
Following the merge, transactions are about 10% faster, implying that it now takes 12 seconds for a new block to be added to the chain. This is only a slight improvement over the mainnet's block time of 13.3 seconds, and users may not even be able to tell the difference.
Anyone can be a validator under the new PoS model.
Staking is the foundation of the PoS consensus model, so those who want to be transaction validators in this new iteration of Ethereum must have at least 32 ETH locked away.
Besides, while the minimum amount of ethereum required to become a validator is 32 ETH, this does not guarantee that a validator will be chosen for transactions, as more staked ETH increases a validator's chances of being chosen by the system to validate transactions for a reward. Moreover, while supercomputers are no longer required, there are still some basic hardware requirements.
Staked ETH can be withdrawn after the Merge
Before the merge was completed, investors who intended to become validators began to stake their ethereum, and validators now have staked ETH (stETH), a cryptocurrency backed 1:1 by Ether (ETH) that is locked on the Beacon chain and has no withdrawal option.
The staked ETH withdrawal option is expected to be available in another scheduled Ethereum network update following the merge, known as the Shanghai update, which could take 6-12 months or more.
Read Also: NFT Consulting Firms: Here is Everything You Should Know
Bottom Line
It's safe to say that the merge was a success, and the Ethereum developers, engineers, and team should be commended for pulling off such a feat with almost no recorded hitches. The true success of the update will be tested in the coming months, and there is much to look forward to with more updates on the way that promises to improve scalability, speed, and security.
Storing your cryptocurrencies in online wallets, exchanges and software wallets exposes you to risks of being hacked. Consider storing them in a hardware wallet today