The Merge, the process by which Ethereum updated its software to a more environmentally responsible one, ended today at 8:42 a.m. Spanish time, at block 15537393 . From then on, Ethereum said goodbye to mining and welcomed Proof-of-Stake (PoS) validated transactions through staking.
“The merger will reduce global electricity consumption by 0.2%,” Vitalik Buterin, co-founder of Ethereum and the most visible face of this blockchain, has tweeted. Ethreum 2.0 will consume 99.9% less energy, according to estimates from the Ethereum Foundation.
This is certainly good news for all corporations and institutions that want to invest in ETH, offer staking services to their clients, or build decentralized applications on the erc20 token development network. Ethereum’s high energy consumption made it incompatible with the Sustainable Development Goals. In fact, it was one of the main problems faced by companies that wanted to bet on Ethereum.
The Swiss bank Seba announced the provision of staking services on ETH 2.0 for institutional clients days before the merger took place. Binance US, the US division of the Binance exchange, also offered staking for ETH with high returns prior to the Merge. Staking is the way to obtain passive returns by leaving your cryptocurrencies on deposit.
Happy melting everyone. This is a great time for the Ethereum ecosystem. Everyone who helped make the merger a reality should be very proud today. However, Buterin announced at the Ethereum Conference in Paris that the merger is only the first in a series of actions that will take place over the next few months. Vitalik said in Paris that with the transition to PoS, Ethereum is only 40% up to date. In fact, for the long-awaited scalability and for the reduction of transaction fees, we will have to wait.
The social network Twitter has been filled with congratulations and congratulations to all those who have collaborated in the development of the new Ethereum. Some, like the artist Beeple, who sold an NFT minted on the Ethereum network for 70 million dollars in March of last year, collects the historical moment of Ethereum in his work The Merge.
Others talk about what an incredible feat it is to transition from a globally used blockchain to PoS without most end users even realizing or having to do anything.
It should be noted that the merger has hardly had an impact on the price of Ethereum. At this time it is trading at $1,586 , with a fall of 1.43% in the last 24 hours, a behavior that has disappointed more than one in the community.
Next update: Shanghai
The next Ethereum upgrade is Shanghai. The update will allow the initial stakers of the Beacon Chain, the PoS chain created in 2020, to withdraw their erc20 token generator and the commissions obtained during these two years. Shanghai will facilitate shard chains, which will serve to provide scalability to Ethereum 2.0. It is estimated that the arrival of Shanghai to the Ethereum 2.0 testnet networks will not be before a year. Meanwhile, companies will continue to push the development of Layer2 solutions, such as Polygon or Arbitrum One.
In the days leading up to the merger, the crypto community has long debated the pros and cons of moving to PoS. For many, it represents a setback in the decentralization of the network. To start up a validator node of those that have the power to add or veto transactions, you have to deposit 32 ETH, about 60,000 euros. If that amount is not available, there are platforms where you can deposit much less money for staking, but they are platforms controlled by private companies. An example is Lido .
The DAO and decentralization
The debate about the decentralization of Ethereum is a matter that goes back a long way. From the moment the hack to The DAO occurred. It happened in June 2016, a year after the launch of Ethereum. The stolen ETH was equivalent to about 60 million dollars on that date. In order to invalidate the transactions, Vitalik proposed to make a fork, something that goes against the basic principle of any public blockchain: its immutability. People opposed to the fork kept the original chain, giving rise to Ethereum Classic (ETC), which these days has appreciated more than 3% and is trading above $38.
Ethereum 2.0 has erc20 development service also found dissidents. A group led by ETH miner Chandler Guo, one of the key people in the Ethereum Classic hard fork, has created EthereumPoW. This is a project that has decided to keep the proof of work to preserve the original network. EthereumPoW plans to fork the network 24 hours after the mainnet merger.
Regarding the debate on the decentralization of Ethereum, the Blockchain Observatory reported yesterday on Ethereum’s increasing dependence on centralized cloud services for its operation. Amazon Web Services alone accommodates more than 53% of all Ethereum nodes currently active in hosting mode. This means a value greater than 30% of the global nodes of the network. The distribution of Ethereum nodes in hosting represents 67.95% of the entire network.