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The merger of Ethereum is completed, opening a new era of the second largest blockchain!

September 16, 2022

Latest company news about The merger of Ethereum is completed, opening a new era of the second largest blockchain!

The historic upgrade ditches the miners who previously pushed the blockchain and promises huge environmental benefits.

The massive overhaul known as the merged ethereum has finally happened, after years of development and delays, moving the digital machines at the heart of the second-largest cryptocurrency to a more energy-efficient system.
Swapping out one way of running a blockchain called Proof-of-Work for another called Proof-of-Stake is no small feat. “The analogy I use is the idea of ​​switching engines from a moving car,” said Justin Drake, a researcher at the nonprofit Ethereum Foundation, who spoke with CoinDesk before the merger happened. "I like to think of it as a transition from gasoline to electricity
The rewards can be huge. Ethereum should now consume around 99.9% of its energy. According to one estimate, from an energy cost perspective, it would be like Finland suddenly shutting down the grid.
Ethereum’s developers say the upgrade will make the network — an ecosystem of $60 billion worth of cryptocurrency exchanges, lending companies, non-fungible token (NFT) markets and other applications — more secure as well. and scalable.
The idea from the beginning was that Ethereum would eventually move to proof-of-stake. But the transition is a complex technical endeavor—a risky endeavor, so much so that many wonder if it will ever happen.
"Part of me hadn't fully realized that it actually happened," Drake said, "and I kind of denied it, you know, because I've trained myself to just expect it to happen in the future."
When the merger officially kicked off at 2:43AM EST, more than 41,000 people watched the "Ethereum Mainnet Merger Watch Party" on YouTube. They watched with bated breath as key metrics indicated that Ethereum's core systems were still intact. After about 15 minutes, Merge is officially complete, which means it can be declared successful.
The update ends the network's reliance on the energy-intensive process of cryptocurrency mining, and crypto investors, enthusiasts and skeptics have been closely watching the impact it is expected to have on the wider blockchain industry.
Dallas Mavericks basketball investor and billionaire owner Mark Cuban told CoinDesk that he will be “watching [the merger] with as much interest as anyone else,” noting that it could be deflationary for the network’s native token, ETH.
Within minutes of the merger, ETH, which currently has a market capitalization of nearly $200 billion, making it the second-largest cryptocurrency after Bitcoin (BTC), was trading at $1,632, down about 24 hours over the past 24 hours. 0.4%.
The complexity of the update is compounded by the fact that it may be one of the largest open-source software efforts in history, requiring coordination among dozens of teams and dozens of researchers, developers, and volunteers.
“I think Merge can really attract people who are interested in ethereum but are skeptical about the environmental impact to try it,” Tim Beiko, an Ethereum Foundation developer who played a key role in coordinating the update, told CoinDesk.

Goodbye Miners

In 2008, Bitcoin introduced the world to the concept of a decentralized ledger — a single, immutable record of transactions that computers around the world can view, change, and trust without intermediaries.
Launched in 2015, Ethereum expanded on the core concept of Bitcoin with smart contracts — or computer programs that effectively use the blockchain as a global supercomputer, recording data onto its network. This innovation is the fundamental element behind Decentralized Finance (DeFi) and NFTs — the main catalyst for the recent cryptocurrency boom.
Merge eliminates Ethereum’s proof-of-work system, in which crypto miners compete to write transactions into their ledger and earn rewards for solving cryptographic puzzles.
Today, most cryptocurrency mining takes place on “farms,” although they might be more aptly described as factories. Imagine huge warehouses, with rows of computers stacked on top of each other, like bookshelves in a university library—each computer feels hot to the touch as it struggles to pump out cryptocurrency.
This system pioneered by Bitcoin is what causes Ethereum to consume so much energy and is responsible for fueling the blockchain industry's reputation as an environmental threat.
“A few months ago, my daughter and I talked about NFTs,” recalls Ben Edgington, head of product at Ethereum R&D firm ConsenSys. "At the dinner table, I mentioned some NFT projects rather stupidly and she yelled at me, 'How can you boil the ocean with this crap? This sucks. I can't believe you're doing it for a living. '"
Edgington, who started his career in climate science research before finally landing in cryptocurrency, understands where his daughter is from. "Rightly or wrongly, she has absorbed a very pernicious environmental narrative," he said. "I mean, the 'adult sticker' that some people estimate is emitting one megaton of [CO2] a week is a little hard to justify."
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Ethereum’s new system, Proof of Stake, does away with mining altogether.
Miners are replaced by validators - they "stake" at least 32 ETH by sending it to an Ethereum network address that cannot be bought or sold.
These staked ETH tokens act like a lottery ticket: the more ETH a validator stakes, the more likely it will be drawn, allowing it to write “blocks” of transactions into Ethereum’s digital ledger.
Ethereum introduced a proof-of-stake network called the beacon chain in 2020, but until the merger, it was just a temporary area set up by validators for switching. Ethereum’s transition to proof-of-stake involves merging the beacon chain with Ethereum’s main network.
According to Beiko, proof-of-stake energy consumption “is not even a rounding error in terms of environmental impact.”
"Proof of stake is like running an app on your MacBook," he said. "It's like running Slack. It's like running Google Chrome or running Netflix. Obviously, your MacBook is plugged into the wall and running on electricity. But no one thought about the environmental impact of running Slack, right?"
Edgington points to the environmental impact of the Merge upgrade as the benefit he is most excited about personally. "I'm very proud, you know, to be able to look back and say that I played a role in removing a megaton of carbon from the atmosphere every week. It had a meaningful impact on my family and others," he said. 

New Incentives

Rather than being an open source software, the Ethereum network is better understood as a nation-state — a living organism that comes together when a bunch of computers speak the same language, all following the same Collection rules.
Ethereum’s new system introduces a new set of incentives for those who operate these computers to follow written rules that protect the ledger from any unwanted tampering.
"Proof of work is a mechanism for taking physical resources and turning them into network security. If you want your network to be more secure, you need more physical resources," Beiko explained. “On Proof of Stake, what we do is use financial resources to convert to security.”
Although Ethereum has thousands of individual miners operating and securing its proof-of-work network, computers from three mining pools dominate the majority of the network’s hash rate, a measure of the collective computing power of all miners.
If several of Ethereum’s large mining companies colluded to accumulate most of the network’s hash rate, they would be able to perform a so-called 51% attack, making it difficult or impossible for anyone else to update the ledger.
In proof-of-stake, the amount of ETH a stake — not an amount of energy consumed — determines control over the network. Proponents of proof-of-stake say this makes the attack more expensive and self-defeating: attackers can have their staked ETH slashed or reduced as punishment for trying to disrupt the network.
Not everyone believes in the proof-of-stake hype. For example, there is no sign that Bitcoin will ditch proof-of-work — proponents insist it is still a more battle-tested and secure system.
While control of the ethereum network will no longer be concentrated in the hands of a handful of publicly traded mining groups, critics insist that old power players will only be replaced by new power players. Lido is a community-operated collective of validators that controls over 30% of the Ethereum proof-of-stake chain. Coinbase, Kraken and Binance — the three largest cryptocurrency exchanges — own another 30 percent of the network.
Doubts about proof-of-stake prompted prominent crypto miner Chandler Guo to announce before the merger that he would launch a fork of Ethereum's old proof-of-work chain -- a clone of the ethereum blockchain. Use the old miner-based mechanism.
Ethereum's core developers typically deride proof-of-work forks as sideshows and scams, but Guo's "ETHPOW" effort and others like it have gained modest ‍ traction in certain corners of the crypto community.

Transaction Merger

In crypto markets, the merger has been the subject of speculation since at least mid-July, with traders initially viewing the event as a catalyst for ETH’s price surge. The ETH options market is starting to price in the combined earnings, a welcome respite from the digital asset market crash earlier this year.
The prospect of angry crypto miners forking the ethereum blockchain has sparked a new wave of activity, this time with traders trying to lock in value from a theoretical airdrop of a new "ETHPOW" token.
Generally speaking, it is impossible to predict exactly how the market will react to a successful merger. The upgrade has been on Ethereum’s roadmap since its inception, so it’s possible that it has already been priced in by the market.
"I think if you had asked me about three weeks ago, I would have said it was not only overpriced, but overpriced," said Kevin Zhou of Galois Capital. “The market is now roughly 70/30 in favor of this being a positive event for ETH.”

What's Next?

“This is Ethereum’s first step towards becoming a very mature system, but there are still many steps to be done,” Ethereum co-founder Vitalik Buterin reflected on the merger at a watch party on Thursday. He went on to mention Ethereum’s relatively high fees and slow speeds, issues that the update didn’t address, but which, like environmental concerns, remain barriers to expanding the network’s user base.
Buterin, ethereum's most high-profile figurehead, has previously outlined a series of next steps for the network, including "sharding" - a way to help solve network slow transaction times and fees by spreading transactions across "shards" Expensive methods such as adding channels in "shards". highway.
The upgrade was originally planned to accompany the transition to proof-of-stake, but it was de-prioritized given the success of third-party solutions, known as rollups, in solving some of the same problems.
Aggregation heralds a possible future for ethereum development, with community solutions—rather than updates to ethereum’s core code—playing a major role in scaling the chain’s ability.
For Buterin, the merger was just the beginning. “To me, the merger just symbolized the difference between early Ethereum and the Ethereum we always wanted to be,” he said on Thursday’s livestream. “So let’s go and build all the other parts of this ecosystem and make ethereum what we want it to be.”

Source: Chain Reform Vanguard

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