In cryptocurrencies the migration of Ethereum to proof-of-stake this year has garnered much excitement since the successful merge in testnet last week. Ether, the cryptocurrencies for Ethereum, has risen almost 14% in the past seven days, with Bitcoin’s rise just 5.9%. The move has closed the gap somewhat between the two with Ether is down about 20% this year and Bitcoin down around 10%. The Merge will change how transactions on Ethereum are ordered with the aim for the network to consume less electricity and run more efficiently.
With the energy crisis full blown Ether is outperforming Bitcoin as optimism that the Merge update will reduce its carbon footprint. It is world’s most used blockchain. It should be noted however that developers have been promising the upgrade for years.
Testing The Merge
The last test of this software before the Merge is triggered began on March 15, and after some initial glitches such as error messages, appears to be running smoothly.
“The ETH merge on ‘Kiln testnet’ caused ETH to outperform the market,” said Teong Hng, co-founder and chief executive officer of Hong Kong-based Satori Research. “It is regarded as an upgrade in terms of the transactions’ validations in Ethereum. The merge was successful with no major issue reported.”
The merge test can be seen here.
Ethereum price rose over $3,000 as the community prepared for merge on the ETH mainnet. There is a spike in Ethereum tokens being burned ahead of the upgrade. Over $5 billion in Ether has been pulled out of circulation through the implementation of the burn.
The Merge to Reduce Supply of Ether in Circulation.
Ethereum’s network will cease using millions of miners (servers) after the merge to order transactions on the blockchain. People will be able to place their Ethers into special staking wallets, which will be used to order transactions. This is called Proof of Stake. This will result in stakers won’t be able to take their coins out at least until another software upgrade, expected about six months after the Merge.
They are also going to be less likely than miners to sell newly minted coins they receive as rewards for being stakers, as they don’t have as high operating costs as energy-thirsty miners, said Kyle Samani, co-founder of Multicoin Capital. After the Merge, Ethereum’s energy consumption should drop 99%.
Ethereum developers work to make sure everything goes smoothly as the entire Ethereum economy, including $349 million in Ether, plus billions in decentralized-finance apps and nonfungible tokens is reliant on it.
Ethereum Foundation officially on The Merge
- Eventually the current Ethereum Mainnet will “merge” with the beacon chain proof-of-stake system.
- This will mark the end of proof-of-work for Ethereum, and the full transition to proof-of-stake.
- This is planned to precede the roll out of shard chains.
- We formerly referred to this as “the docking.”
Page last updated: March 4, 2022
“It would take a catastrophic event for it to not happen this year,” Tim Beiko, a computer scientist who coordinates Ethereum developers, told Bloomberg. Still, some miners expect the Merge will get pushed out into the fall.