As Ethereum’s long-awaited transition from Proof-of-Work to Proof-of-Stake, namely the Merge, approaches, the prospect of a hard blockchain merger is increasing.
The future of the Ethereum blockchain after the Merge
With just over a month to go before the launch of Ethereum’s crucial update, the Merge, which will signify the transition from the Proof-of-Work-based consensus system to the more sustainable and less wasteful Proof-of-Stake system. There is a growing buzz in the crypto community about what the consequences may be for the blockchain network founded by Vitalik Buterin.
The discussions have also included the opinions of those who argue that Proof of Work will live on after the Merge, something to which even Buterin himself has responded quite clearly via Twitter.
Wait I read the above and I'm confused. Why does twitter say that so many people I know follow @Galois_Capital ? Is it a famous parody account?
— vitalik.eth (@VitalikButerin) July 30, 2022
The update, which is scheduled to be launched on 19 September next year, is expected to revolutionize the blockchain network, making it more scalable, cheap and accessible, but it certainly still has many question marks such as that of mining, which could disappear. Precisely to address this drawback, the upgrade has been planned in stages, having begun in December 2020 with the launch of Beacon Chain, which started Phase 0 of the three-step process.
Beacon Chain has begun the transition to PoS, allowing users to stake their Ether (ETH) and thus become validators. The upcoming merger will see the current PoW mainnet merge with the Beacon Chain, transferring the entire history of Ethereum to the new chain. During the recent Paris conference, Buterin explained that the move to PoS, which increases scalability, is just one of the first series of upgrades.
According to Buterin, after the Merge upgrade, the Ethereum blockchain would be about 55% complete:
“Ethereum today can process about 15-20 transactions a second. This Ethereum including the rollups, including the sharding […] it’s going to be able to process 100,000 transactions a second”.
Community opinions about the major update
Some argue that, even after 19 September, the Proof of Stake consensus will continue to exist alongside the Proof of Work consensus, precisely to allow for a less traumatic transition.
Others, however, argue that in any case, miners are already considering moving to a parallel Ethereum with the PoW system. It is no coincidence that Ethereum Classic has seen a veritable explosion in prices in recent weeks. ETC, the hard fork of Ethereum created in 2017, will still maintain the Proof of Work system.
Speaking to the online magazine Blockworks, Michael Bentley, CEO of Euler, a non-custodial DeFi protocol on Ethereum, revealed:
“In an ideal environment, there will be a consensus that we all move to the proof-of-stake blockchain, and there wouldn’t be any dispute about that, but whenever you make a big change, there are always winners and losers, and in this case, there are some fairly clear losers”.
Great uncertainties also exist about what may happen after the upgrade to Ethereum’s price, which have been booming in recent weeks, up more than 50%.
In an interview on 29 July, Barney Chambers, co-founder and principal co-developer of the DeFi cross-chain platform Umbria Network, said:
“The accumulation of Ethereum will centralize in the hands of validators who already hold the majority of the tokens. The Ethereum Foundation claims that the merge will not impact the price of Ethereum, but the Merge will cause a fundamental shift in the way that new tokens are distributed and this will have a dramatic effect on the price of both Ethereum and the entire cryptocurrency ecosystem”.