Ethereum’s transition from PoW to PoS is here to prove that a decentralized and permissionless network can operate in an energy-efficient manner. The merge will likely cause a renewed interest in Web3 projects aiming to build on top of the Ethereum network. Moreover, the merge will improve nearly all metrics of the Ethereum blockchain, making way for future innovation of applications and experimentation.
Some of the longer-term advantages of the “Merge” include:
The Ethereum Merge is without a doubt the most significant update within the crypto and blockchain ecosystem. According to the Ethereum Foundation, ether uses around 112 Terawatt-hours of energy annually. That is approximately the same amount of energy used for the entire Netherlands. The merge, which eliminates the energy-intensive proof-of-work system, will cut emissions by an estimated 99.95%. The update should not only make Ethereum greener but also lessen the stigma associated with cryptocurrencies among many individuals who are concerned about the environment.
- Simpler and faster technology adoption of blockchain
A single Ethereum block takes around 13-14 seconds for mining. However, with the implementation of the proof-of-stake (PoS) mechanism, the validation time for a block will only take 12 seconds. Following the Merge, The Ethereum network will break up the data blocks into smaller blocks enabling more transactions to happen at a faster pace. As a result, it will be simpler and faster to use because it can contain more transactions in a single block.
Combining PoW/PoS will lead to the utilization of all elements of both models. The switch to proof-of-stake (PoS) will drastically impact the economics of the validating structure, the energy demand, and the hardware needed for mining, reforming various facets of the proof-of-work (PoW) consensus mechanism. The PoW mechanism was a tried and tested mechanism for adding new blocks to the blockchain. To add blocks, miners used this approach to solve challenging computational challenges. It was a highly energy-intensive process for miners.
- Advantages for businesses and consumers
The upgrade to Ethereum 2.0 is a positive one for Ethereum holders. Ethereum 2.0 will change the fee structure that will lead to users paying less for transactions and even allow holders who have the necessary amount of ETH to stake their coins in the network and become validators. Moreover, apps that already exist on the Ethereum network will simply migrate to Ethereum 2.0 without losing transaction records or data.
The PoW mining system will be eliminated with the release of Ethereum 2.0 in favour of staking. As a result, mining as we know it will become outdated, and miners who want to validate transactions for block rewards and transaction fees will need to switch to staking.
- Yield and Manageability of mining ETH
Following the merge, Ethereum will generate a yield of approximately 4% to 6% on an annual basis if the holder stakes its Ethereum on the network. By taking Ethereum, the network will grow and become more secure since the proof-of-stake (PoS) model rewards honest validators and aims at disciplining dishonest validators and their delegators.
The Merge emerges as a triumph for Ethereum when all is said and done. It will open up a whole new universe for decentralised applications and industry use cases in addition to enabling new blockchain-based advancements. The most intriguing feature of these advancements, though, is that everyone can benefit from them, which was not achievable with Web2.0.
(Author Vikram R Singh is founder and CEO at Antier.)
Credit: economictimes.indiatimes.com – Source link