- The event occurred at 11:42 p.m. PDT and was finalized 15 minutes later when the first block was produced under the new protocol.
- The actual Merge was flawless and was met with applause as observers waited for the first block to be produced. A new era for Ethereum had begun by midnight.
The long-awaited Ethereum “Merge” update was completed just before midnight on Wednesday, and the blockchain has moved from its “proof-of-work” validation mechanism to a “proof-of-stake” system under the hood.
The Merge altered nothing for consumers and developers. However, for present Ethereum miners and those creating new crypto tokens, millions of dollars worth of outdated equipment will no longer work on the network.
Proof-of-work is a validation technique pioneered by Bitcoin, an energy-intensive procedure that requires several machines to solve complex puzzles to secure blockchain transactions. It will be replaced with proof-of-stake, where blockchain users “stake” or lock up their tokens to prove they have a stake in the blockchain to safeguard transactions on the chain.
The transfer, known as “the Merge,” has been planned for years by the Ethereum core development team and will lower the energy used by blockchain by almost 99%. It’s also part of a longer-term plan that will allow developers to add more and better features, such as scalability and security.
It’s nicknamed the Merge because Ethereum has been running alongside a fork of itself for some time now, successfully running a proof-of-stake system that “merged” with the mainnet replacing the proof-of-work system. This was like swapping out a plane’s engine while it was flying.
The event occurred at 11:42 p.m. PDT and was finalized 15 minutes later when the first block was produced under the new protocol. During the whole endeavor, several Ethereum users, developers, and others rushed to the internet to watch the event in viewing parties, with one having more than 41,000 people at its peak.
The actual Merge was flawless and was met with applause as observers waited for the first block to be produced. A new era for Ethereum had begun by midnight.
Cryptocurrency staking offers rewards for being a part of defending network transactions. Under the Ethereum staking paradigm, admission is a significant barrier, requiring 32 ETH, or around USD 51,000. Now that the Merge is complete, significant exchanges, including Coinbase, Kraken, and Binance, will offer Ethereum staking services that allow users to stake smaller amounts of ETH for rewards.
Although it’s possible to stake ETH today, unstaking ETH will not be feasible until Shanghai, the next update of the Ethereum blockchain, happens early in 2023.
One of the most significant benefits of the move from proof-of-work to proof-of-stake is that it reduces blockchain energy demand. Before the Merge, Digiconomist projected that Ethereum consumed as much yearly energy on average as the entire country of Chile. This was because proof-of-work is an energy-intensive procedure, and it has garnered the attention of regulators over energy sustainability and environmental concerns.
Ethereum mining is a multibillion-dollar industry, and the Merge has displaced as many as one million people with over USD 10 billion in mining equipment. As per a statement, Ethermine, the largest Ethereum mining pool by processing power, closed its servers, and unpaid miners will be paid soon. The service has directed miners to alternate proof-of-work coins and built a staking service.
A lot of Ethereum mining is done by high-end graphics cards, which generates graphics processing unit shortages and high retail pricing. The Merge has helped ease this problem. However, miners who no longer need their GPU-powered computers may try to sell them, overwhelm the market, or dump them, thus generating vast amounts of e-waste.
Alternatively, miners may switch their rigs to Ethereum Classic, an older proof-of-work of Ethereum or another proof-of-work blockchain to continue to make money from crypto mining.
Another option for miners is EthereumPoW, a proof-of-work hard fork, which is anticipated to deploy within 24 hours, according to the project. The concept is the brainchild of Chinese crypto miner Chandler Gao, who unveiled it in July after warning the Merge would put miners out of business.
Today’s release diverts Ethereum for future improvements, allowing it to scale up much more. Ethereum can only handle 30 transactions per second, which causes congestion, delays, and high costs. To manage this, additional scaling is assisted by Layer-2 blockchains built on top of the network.