The
cryptocurrency industry was buzzing with expectation and excitement as
Ethereum, the second-largest blockchain by market capitalization, prepared for the Ethereum Merge. In this detailed article, we will look at
the Ethereum Merge concept, its relevance in the crypto industry, the mechanics
of this transfer, and the impact it had on cryptocurrency investors.
Introduction
Since its
creation, Ethereum, also known as the backbone of the decentralized finance
(DeFi) ecosystem and non-fungible tokens (NFTs), has used a proof-of-work (PoW)
consensus mechanism. However, the scalability and energy efficiency of Ethereum
have long been a source of contention. The Ethereum community went through a long journey known as the Ethereum Merge to address these concerns and pave the path
for a more sustainable and scalable future.
Understanding
the Ethereum Network
Before we go
into the Ethereum Merge, let’s take a quick look at the Ethereum network and
its current state. Ethereum is a decentralized blockchain that allows smart
contracts and decentralized apps (DApps) to be created. It has garnered
significant acceptance because to its adaptability and programmability,
enabling a plethora of initiatives in the cryptocurrency industry.
Introduction
of Ethereum Merge
The Ethereum Merge
includes the network’s consensus mechanism switching from proof of work (PoW)
to proof-of-stake (PoS). This modification fundamentally alters how
transactions are validated and new blocks are added to the ethereum blockchain.
PoS selects validators to create new blocks based on the amount of
cryptocurrency they own and are prepared to stake ether as collateral, whereas
PoW relies on miners solving complicated mathematical riddles.
One Year
After the Ethereum Merge: What Has Changed?
Ethereum’s
transition from proof of work to proof of stake led to a dramatic reduction in
energy consumption. The network’s carbon footprint decreased by 99.99%,
aligning with growing environmental concerns associated with crypto.
In what
concerns liquid staking, the amount of Ethereum staked has nearly doubled since
the merge, with 26.5 million Ethereum, worth around $43 billion, now staked.
Ethereum’s
scalability, however, still remains a key concern for adoption. While the merge
itself didn’t directly impact speed, the upcoming “surge” upgrades
are expected to enhance Ethereum’s scalability. Layer-2 solutions have already
increased transactions per second significantly.
As for regulatory
challenges,…
