This summer Ethereum completes 7 years of existence of the Ethereum network and Ether. According to an Ethereum development company Rejolut, Ethereum is set to undergo a major upgrade in its protocol which will completely revamp its network from Proof-of-Work (PoW) to Proof-of-Stake (PoS). The upgrade which is scheduled to happen in the upcoming months would bring some significant changes to the Ethereum network and potentially change the investment outlook for the popular blockchain.
The Ethereum’s core development team is reported to have said that the Merge will have a major impact across the Ethereum ecosystem from miners to developers and end users or simply we can say it will affect every participant. Participants must get themselves acquainted with the basic plumbing behind the Ethereum network before the actual upgrade happens later.
So, let’s gain some quick insights into how Ethereum would be transformed in 2022:
What is Ethereum?
Ethereum is one of the earliest Decentralized Ledger Technologies (DLT) that various companies utilize to make new programs and value transfers. Ethereum would be a very familiar name for any crypto world enthusiast as it has been often referred to as the ‘Queen of Cryptocurrencies’. It is also one of the first platforms to be part of the earliest Blockchain technology, and Ethereum was the first Blockchain project to install revolutionary Smart Contracts technology. The use of Smart Contracts eliminated the need for a third party to enter into an agreement.
The Ethereum Virtual Machine (EVM) that works as an aggregate power of each of the nodes lets developers create decentralized applications (DApps) on Ethereum Blockchain.
Ethereum has carved out a niche for itself in the hall of Blockchain, but somewhat it stands behind in terms of speed and scalability. But with the recent announcement from Ethereum Foundation regarding the change in the consensus mechanisms can change everything.
What is Ethereum Merge?
Ethereum merge is the tectonic shift in the cryptoverse, which will the Ethereum’s transition to a new system. Proponents say that it will be a complex multi-step process for the platform to make it more efficient, sustainable, and scalable.
Unlike earlier where the platform was secured by miners, here the platform will be secured by the validators by creating blocks when chosen by the blockchain and confirmed by others. Whenever a new block is added to the network, the reward will be distributed for helping secure the network. To become a validator, one needs to have at least 32 ETH in order to stake and participate, but the more ETH that is staked the chances of becoming a validator significantly rise.
The rewards which will be paid to validators are the gas fees for using the Ethereum network. The upcoming upgrade will introduce sharding to speed up the network and reduce the prevalent high gas fee. The sharding is the process of splitting of network into different pieces and by doing it is expected to lower costs and increase transaction speed.
What holds in future after the Merge?
Ethereum developers and experts at Rejolut say that the planned upgrade will make the total ETH supply shrink and provide token holders with an opportunity to stake their tokens. Those worrying about energy consumption will get a reason to rejoice, as after the transition to the new PoS consensus mechanism it will become more energy efficient.
The world is looking at web3 and waiting for the transition from web2, but one of the major causes of stalling it will be addressed after the merge happens. The energy-efficient increased efficiency of the network will allow web3 companies to build their projects on an incredibly efficient and secure network.
The Ethereum’s merge will improve nearly all metrics of the network to pave the for future innovation of applications and experimentation. Further, it will also make Ethereum a direct challenger to other layer 1 network blockchain networks and will ensure Ethereum’s supremacy as the leading smart-contract network in the future.
Also read: ADA and ETH: One of These Things is Like the Other
