Ethereum geared up for The Merge: Here’s all you need to know

New Delhi: Ethereum‘s much awaited software update named ‘The Merge‘ is just a few hours away, which will shift its mechanism to proof-of-stake (PoS) from existing proof-of-work (PoW).

The Merge has attracted numerous headlines, hogged ample limelight, philosophical debates about the future of Ethereum and multiple technical analysts, but one can not look past the energy efficient mechanism after the update.

According to the Ethereum Foundation, PoS will cut Ethereum’s energy usage by around 99.95 per cent. The foundation is a non-profit organization that funds Ethereum ecosystem development.

PoS advocates also argue that PoW mining centralizes control in the hands of those who can afford to buy fancy crypto mining rigs, called ASICs. It is also argued that PoS is a less battle-tested system than PoW.

Sathvik Vishwanath, Co-Founder and CEO, Unocoin said that eliminating proof of work has brought the computing giant a need for new opportunities. “The Ethereum network will be ‘for the people and by the people’ after the merge.”

“This merger can be seen as a big part of the global crypto market and will affect not only the coins and tokens based on Ethereum Blockchain, but others as well, as Ethereum is one of the biggest functioning blockchain,” he added.

The exact time of the merge is not determined; it is expected somewhere around September 14 or 15, 2022 because block difficulty and issuance rate vary over time.

Instead of kicking in at a specific date, the Merge is scheduled to take effect once the cumulative difficulty of all mined Ethereum blocks hits a certain number – the ‘total terminal difficulty’ (TTD).

It is named as the merge as full transition to PoS mechanism would require merging Ethereum’s existing Beacon Chain (called the ‘consensus’ layer) with Ethereum’s PoW mainnet (the ‘execution’ layer).

The merge is unlikely to slash Ethereum transaction fees. Though, future network updates may address the high fees issue, but one shall not expect them before 2023.

However, it will marginally improve the transaction speed of the network, which issues a block every 13-14 seconds on PoW system, which would be done in a regular 12 second interval in the new PoS regime.

Despite the improvement, Ethereum network is far behind its largest competitors including Solana and Avalanche. But, the community would require to wait longer for any significant improvement in its transaction speed.

The Merge will improve the infrastructural capacity as it looks to provide developers and end users greater power to access apps seamlessly, said Prashant Kumar, CEO and Founder, weTrade.

“It also puts Ethereum away from Bitcoin and closer to Solana and Cardano,” he added. “If successful, it could lay a roadmap for wider adoption in the future.”

If the merge will have an impact on the price of Ethereum, is yet to be known as there are many variables and unknowns which make the price predictions for the token impossible. One must note that the Merge is not a guaranteed price booster.

The Merge will also introduce changes to the rate over issuance and distribution, which can go either positive or negative, depending upon the outlook. However, speculations are already being priced in by the markets.

Some Ethereum miners are reluctant to let go of the network’s old consensus mechanism and have announced plans to ‘fork’ or form a splinter network from Etheruem’s PoW chain, but the value for them remains unclear.

Pratik Gauri, Co-founder & CEO, 5ire said that This is a great sustainable development, many miners are not willing to accept it and mainly economic reasons, hard core believers in the PoW consensus and miners plan to fork the Ethereum blockchain after the Merge.

“Most leading exchanges have announced that they would review listings for any forked tokens but made no guarantees they would be accepted,” he added. “This would become a shadow token of the Ethereum.”

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