What all the crypto enthusiasts expected is, at last, going to happen, sometime next month (Currently scheduled for 19 Sep 2022).
Yes, I am talking about Ethereum 2.0 or “The Merge”. It is currently a booming topic around the internet.
Let’s jump into the topic without any delay.
The most widely used Ethereum blockchain is set to undergo a major upgrade from its protocol PoW (Proof of Work) to PoS (Poor of Stake).
It is going to make significant changes to the crypto universe. The popular blockchain is potentially going to change the existing investment outlook, for sure.
This is how we, as blockchain tech savvies, highly recommend all our global clients and crypto enthusiasts to be prepared to educate on the transition.
Okay, it’s time to go into the real details of the largest “merge” in the crypto world.
As discussed, it is a long-awaited change to the Ethereum blockchain system. The “merge” refers to big implications for the cryptocurrency future and Ethereum traders.
The network that we all know currently as Ethereum or ETH1 (The execution layer) will be going to merge with Beacon Chain and become ETH2 (The consensus layer).
The switching to Ethereum 2.0 will still retain its prior transactions under the proof of work protocol only. But here, the new system called — ‘Beacon Chain’, will store the transaction history using the proof of stake protocol.
See the key differences between Ethereum’s PoW and PoS protocols below.
Proof of Work: In the PoW mechanism, the cryptocurrency hardly relies on miners who mine crypto coins by solving complex mathematical calculations. The process employs energy-intensive graphics cards.
Proof of Stake: In the PoS mechanism, the cryptocurrency relies on the actual owners of the coin and stakeholders to validate the transactions. It secures the network while bringing rewards to the stakeholders from the transaction fees.
So, Ethereum 2.0 will be secured by the validators STAKING their ETHER on the network. It takes only 32 ETH in order to become a network validator.
A part of the PoS transition will introduce “Sharding” — a strong technical upgrade that separates the Ethereum network into different pieces to enhance the transaction speed and reduce the network charges.
It is one of the main questions; now, you mostly think of it, if I am not wrong with the discussion.
To answer this straight, we can expect many important things as mentioned below.
Ethereum 2.0 will see a 99.95% reduction in power consumption in securing the network. It will definitely be a better energy efficiency contribution by the blockchain platform for stakeholders around the world.
As the current Ethereum proof-of-work scheme is highly dependent on the heavy output graphics cards, it is so expensive to replace in time. It also affects the supply chain dynamics with unseen dependencies. Now, the fortunate thing is, after the merge, a “common laptop” will be enough for securing the network.
The substantially less energy and the reduced expensive hardware will not require much ETH to participate in securing the network. The issuance of Ethereum will drop from 4.3% to 0.43% as a huge shift in the fundamentals of the ETH, the asset. It is 90%! That would consequently lead to a cutback of the Ethereum supply by 5% a year.
After the merge, anyone can become a Staker because there is no need for specialized hardware. The more people participate in the protection of the network results in the more powerful the Ethereum chain becomes. With its energy reduction with the new proof-of-stake protocol, the nodes participating in the Ethereum network find it so easy.
Most importantly, Ethereum 2.0 is robust against the bad actors whose economic penalties for misconduct, such as “slashing”, make it considerably more costly on the network. The attackers are also taken out of the pool immediately and can be reinstated after a few weeks. Also, they receive strong financial consequences for submitting poor blocks and other malpractice.
Firstly, after the largest Ethereum merge, there is another process called Sharding that will kick in. It is a process that will essentially assist in preparing the network for the ‘shard chains of Ethereum 2.0’ — that fully relies on the functional PoS network for operations.
By establishing the workload of the network over 64 blockchains, the Shard chains will provide more affordable layers for applications and rollups to store data. They also empower the layer 2 systems to offer lowered transaction fees while benefiting from the Ethereum (mainnet) security.
Secondly, Ethereum among crypto enthusiasts is currently unlike Bitcoin in aspects. It is a fact that the Ether inflation rate has been steadily increasing since the project was launched to the market.
But, now with the MERGE, as A SOLUTION to the matter, the decrease in the total supply of ETH will merely be seen as a positive impact. So, the ETH will have the highest potential to become the second largest cryptocurrency in the market.
The Merge is not only an important milestone for the Ethereum network but also for the largest web 3 ecosystems to significantly consider for your blockchain business initiations.
The Ethereum upgrade is going to address the concerns of all its PoW networks' incapability, henceforth. It is going to allow many Web 3 companies to develop their projects on an immensely efficient and secure network.
The increased efficiency of the Ethereum network will provide you with a solid and effective space to build your blockchain project upon.
I hope the given information about “The Merge” is short and effectively educated you. Stay connected with WeAlwin Technologies for more information regarding Ethereum 2.0 and technology.
Contact our experts for any of your business plans that you would like to establish in the Ethereum network focusing on its vast opportunity to achieve huge enterprise success in the crypto universe.
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