Ethereum's long-awaited The Merge has been successfully completed, changing the network's consensus mechanism to Proof-of-Stake.
At 8:43 am The Ethereum Merge is complete, thus ending one of the most important events in the history of cryptocurrencies and blockchain. With the merger between the main chain and the Beacon Chain, ETH has completed its transformation into a Proof-of-Stake chain.
The developers and managers of the Ethereum Foundation have broadcast the fusion live, through a live, of YouTube, which has been attended by more than 40.000 people and which has had the presence of the Vitalik Buterin, founder of ETH, who recalled that this is a “great moment for the Ethereum ecosystem.”
How did the Ethereum Merge occur?
The change occurred when the total network difficulty threshold, a measure used to determine the difficulty of mining an Ethereum block, has reached 58750000000000000000000 as of early Thursday, September 15, 2022.
The increase in difficulty has occurred with the Paris update, the final step of The Merge, after the Bellatrix implementation last week, prepared Ethereum consensus layer for the main event.
Paris has been the fusion (Merge) between Ethereum's Proof-of-Work mainnet and its Proof-of-Stake equivalent, Beacon Chain.
This change is a milestone in the history of blockchain and has been described as an airplane changing the engine in mid-flight.
From this moment on, the mainnet (the Ethereum main network) will merge with the Beacon Chain and the complete transaction history, including every transaction, smart contract and balance since July 2015, will also be merged.
What will happen to my ETH after The Merge?
Why is The Merge so important?
This is an event that has been in preparation for the last six years and has strong material and ideological implications.
The first one is the efficiency improvement, As Chris Dixon, founder of Think10 Capital, said, “the merger will demonstrate that a decentralized, permissionless network can operate in an energy-efficient way.”
The change to a Proof-of-Stake system, based on validation nodes that accumulate ETH, will reduce Ethereum's energy consumption by 99,95%, since the network will not depend on the mining equipment to operate. Justin Drake, a researcher at the Ethereum Foundation, believes that the change will mean a reduction of almost 0,2% in electricity consumption worldwide.
Nor can we forget the previous steps of the Merge, such as the London Hard Fork (EIP-1559), which took place last summer and implemented an automatic burning system, which eliminates a part of the ETH in circulation and causes becomes a deflationary currency. Since its implementation, this system of burn has already wiped out the equivalent of $5 trillion in ETH.
Furthermore, the network will stop paying miners, so it will go from issuing 13.000 ETH daily to only 1.600.
Of course, the change is not to everyone's liking and a group of miners, concerned about the fact that their mining equipment was going to become obsolete, have decided to fork the network to continue working, creating EthereumPoW.
Reducing energy consumption and institutional money
Another point that has been much discussed by the Ethereum community for a long time is the so-called flippening, that is, a Ethereum to Bitcoin surprise in market capital.
A part of the community advocates that the reduction of the carbon footprint that the change in consensus mechanism will produce could attract the so-called “smart money”, that is, the large institutional players and professional managers, which have been kept on the sidelines due to climate and corporate social responsibility policies.
With the change in consensus mechanism and the improvement in consumption that it entails, Ethereum becomes an attractive and accessible asset for that “smart money”, which could boost the price of the asset and its market capitalization.
Concern about censorship
One of the community's concerns is that the change will make the network less resistant to censorship.
This concern has been increasing after the ban on the use of Tornado cash, since many of the Ethereum validation nodes and staking pools are located in the US, so a decision of this type could affect the operation of the network, as some actors could choose not to validate transactions coming from dApps or platforms sanctioned by the government.
On this matter, Vitalik Buterin himself considers this type of actions as an attack on the network and advocates applying a slashingThat is, stakers lose the ETH locked in the node as punishment for not validating transactions properly.
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