The Merge came to Ethereum: no more mining

The Merge came to Ethereum: no more mining

The Ethereum Merge was activated today, September 15, 2022. Versions 1.0 and 2.0 of the network have been merged and mining is now a thing of the past. Transactions are now validated by staking with proof of stake (PoS).

At 06:42 UTC, at block height 15537393the mining difficulty reached 58,750,000,000,000,000,000,000 and the merger of both blockchains took place.

“Happy Merge everyone”, wrote Vitalik Buterin, co-creator of Ethereum, on his Twitter account. He added: “This is a great time for the Ethereum ecosystem. Everyone who helped make the merger a reality should be very proud today.”

Now the proof-of-stake network will now store transactions that occur. And the history of Ethereum with proof of work (PoW) will still exist on the 1.0 network.

As CriptoNoticias detailed on August 24 in an explanatory article, the Merge occurred from one block to another. This is how the Ethereum Foundation explained it on its blog:

Once the execution layer reaches or exceeds the total terminal difficulty, the subsequent block will be produced by a Beacon Chain validator [y no por un minero con prueba de trabajo].

Ethereum Foundation.

At the time of this publication, Ethereum 2.0 counted with 427,174 validator nodes. These include both those of independent users and those executed by a staking pool.

See also  "Only Ethereum miners want to keep proof of work," analyst says

Each validator has 32 ethers (ETH) in stake. Together they add up to 13,669,452 ETH, which means that more than 10% of ETH in circulation is deposited in the Ethereum 2.0 smart contract.

For at least 6 more months, these ETH will remain locked and then will be progressively released. This is so to avoid massive sales of the cryptocurrency. Let’s remember that many have their ETH deposited in Ethereum 2.0 since December 2020, when staking was enabled.

What changes in Ethereum after the Merge?

A recent CriptoNoticias article explains the most relevant changes after this update. One of these changes has to do with electricity consumption. By abandoning mining (validation of transactions through computational work) and replacing it with staking (validation through money deposited in a smart contract) the energy required is greatly reduced.

The proponents of proof-of-stake argue that it increases energy efficiency. The detractors, on the other hand, criticize that the network becomes —according to them— more insecure and easier to be controlled by an external agent, for example, a Government.

The Merge came to Ethereum: no more mining
Fall of the Ethereum hashrate at the time of the Merge. Font: CoinWarz

Another important change has to do with the monetary policy of Ethereum. Until the Merge, ETH was an inflationary currency. From the merge, it is expected that in most blocks more ETH will be burned than is issued, so it would be a deflationary system.

What changes for Ethereum users?

Those who use Ethereum they should not perceive any change in their user experience, neither for better nor for worse. It is that the Merge only involved a change in the consensus algorithm, that is, in the way the network confirms transactions and issues new coins.

In recent months, several people —including many influencers— have promoted the idea that the Merge would increase the scalability of the network. But that’s not true. Trading on Ethereum is neither faster nor cheaper thanks to Merge. In fact, the co-creator of the network, Vitalik Buterin, is emphatic in saying that scalability will occur in second layer solutions such as rollups, but not in the main network.

Given this, it would not be unusual for many to say that “Ethereum 2.0 was a failure” in the coming days, seeing that commissions are not reduced and the network is not faster. In reality, these people simply had the wrong expectations.

Other cryptocurrencies would benefit from the Ethereum Merge

With Ethereum 2.0 fully operational, it remains to wait to evaluate its performance and how it affects the general ecosystem of cryptocurrencies.

Many mining rigs that were used to mine Ethereum are now waiting to be connected to other networks, so Ethereum Merge May Be a Catalyst for Other Cryptocurrencies to Boost.

Leave a Comment

Your email address will not be published.