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The Ethereum network is one of the most important and influential in the entire blockchain industry. Over the last few years, he has become a major player in the crypto space and his influence continues to expand.
In September 2022, an event known as The Merge took place when Ethereum switched from Proof-of-Work to Proof-of-Stake. It was one of the biggest events in the history of the crypto industry. Now that The Merge comes and goes away, everyone – including here at Coinmama – want to know: What now ??
What does The Merge mean to the future of the Ethereum network and are there any risks to Ethereum in the era after the merger? This is exactly what we will look at in this article, so if you have ETH or consider doing it, follow!
Fusion
On Thursday, September 6, 2022, at 6:40 in the morning, UTC Ethereum finally made a transition to proof of share. It was an exciting moment that made everyone, including everyone in Coinmama, to the edge of their seats.
It was even more intense, considering that several problems of synchronization in the last test network were not found much before, but when the block came and the code was pressed, there was a noticeable sense of relief in the air.
Looking a few months ago, the transition raises a number of questions. One of the main concerns that arose is the risk of centralization of the Ethereum network.
Centralization of validator and future provisions
Ethereum’s successful transition to Proof-Fo-Stake was an important point for the industry, as it noted a significant change in the way intelligent contracts and other blockchain services are protected. This move has also raised important questions about the centralization of the validator and has potential regulatory consequences.
The centralization of the validator occurs when most of the hash’s power required to validate blocks is concentrated in a small number of pools. With the transition of Ethereum to POS, there are now 32 minimum ETH deposits needed to become a validator, which theoretically limits the number of validators for the era (6 minutes) to only six. Although this can help reduce the risk of centralization, it still remains a problem.
As for future provisions, there may be fears that validators are subject to authorities, as they are based mainly in countries like the United States. However, with a POS system, nodes without betting have more power than before, when it comes to maintaining nodes under control – thus potentially reducing the risk of raw regulation.
Ethereum Road Map and Improvement of Scalling
The Ethereum roadmap is filled with several superstructures that will improve scaliness, the most anticipated of which are Charding and Verkle trees. Charding involves dividing the blockchain into multiple parts and allowing individual nodes to process only part of the transactions in each Shard. This would allow faster processing of transactions, as well as more efficient use of resources. Charding would also make it easier for developers to create large -scale blockchain applications because of its scale.
Verkle trees, on the other hand, are a data structure used to secure data storage in blockchain. It works by storeing data hashs, not the actual data itself; This prevents data manipulation or experience to access it without permission. Verkle’s trees are expected to improve the speed and security of transactions into Ethereum by reducing the cost of storing and improving scales.
These two superstructures in combination could provide Ethereum with some huge improvements to scalability after being activated on the Ethereum main network. Although these improvements should help reduce storage costs and increase transaction speeds in Ethereum, they will not be able to do so without new consensus algorithms or other modifications designed specifically for them-which makes even more important for developers working on scaling solutions for Ethereum to find ways to include them in their projects.
While the Verkle Charding and Trees have shown a huge promise when it comes to increasing the scalinality of the Ethereum blockchain platform; There are still several technical challenges that must be resolved before becoming viable decisions. These solutions will require an active approach from developers to find ways to include them in their projects if Ethereum is successful in the future.
The impact of The Merge on Ethereum’s monetary economy
Merge’s success in the drastic reduction in ETH emissions is an important cornerstone for Ethereum’s monetary economy. This significant decline in offering ETH has led to deflationary conditions that can have both positive and negative effects depending on various factors.
Deflation can encourage people to retain their assets instead of spending them as they become more valuable over time. This can reduce the liquidity and circulation of funds, which can lead to economic stagnation. On the other hand, this reduction in supply can also lead to an increase in demand due to a shortage, which would increase prices-potentially creating a more favorable investment environment.
Combining is an important step forward in creating a more resistant and effective financial ecosystem for Ethereum users. Not only does it reduce the cost of digging, but it also reduces the amount of ETH that is available for future use, which can potentially create a deflation environment leading to increased demand and higher prices over time.
Restricted Validators Deposits
Restricting the number of validators who can make initial deposits in each era (6 minutes) to only six serves to prevent congestion on the Ethereum network. With only six permitted validates for the era, this helps to ensure that the participants are well capitalized and capable of fulfilling their duties as validators. This helps to maintain the security and integrity of the blockchain, ensuring that those who have made deposits have the right financial resources.
The ceiling for how big a person’s deposit can be further helps to maintain a fair and balanced environment for all participants. By limiting deposits amounting to more than 5,000,000 ETH in each given era, no validator can obtain too much control over the network or be able to manipulate its functioning. It also mitigates the potential risks associated with centralization and involuntary formation of a monopoly.
All these measures contribute to maintaining the reliability of the Ethereum network, allowing strong decentralization without sacrificing efficiency. By limiting the initial deposits to only six for an era, the optimal balance between security and scathing is achievable for both diggers, developers, users and investors.
Reduced Consumption of Energy and Emissions of Carbon Dioxide
The transition to a consensus algorithm for evidence of a bet on Ethereum drastically reduced the energy consumption and carbon dioxide emissions compared to the previous model of evidence of work. According to a new Crypto Ratings Council report, energy consumption and carbon dioxide emissions have been reduced by over 99.9%.
This means that Ethereum is already one of the most effective blockchain in terms of energy consumption and environmental resistance. The transition to POS allows a more rational system in which validators are able to check transactions with less necessary resources, which leads to significantly lower energy costs and less dependence on fossil fuels for mining operations.
Reducing energy consumption and carbon dioxide emissions is not only beneficial to the environment, but also helps maintain Ethereum’s long -term viability as a crypto asset. Lower energy costs mean that miners will be able to better manage their operations, which will lead to higher profits and stimulate the continuous development of the platform. And the smaller greenhouse gas emissions means that Ethereum users can be calm, knowing that their investments help create a greener future for all participants.
The successful implementation of Ethereum’s POS by Merge is an incredible achievement not only for the platform, but also for the larger picture of blockchain technology as a whole. It serves as an example of how blockchain can be used sustainably, while maintaining its basic characteristics of decentralization, invariability and reliability. In the future, other blockchain can view Ethereum’s successful transition to POS as an inspiration to create more environmentally friendly solutions in the future.
Consequences of merging for institutional investors
Following the Merge, Ethereum’s energy consumption was drastically reduced, which caused some institutions that had previously been repulsed by the Crypto Association with the use of energy to consider investing in Ethereum by betting on their ETH tokens. This further serves as an incentive for investors interested in investing in ESG (environmental, social and management) who can now earn passive income without worrying about high gas fees or competing with graphic processors – like At the same time, they reduce global energy consumption.
The success of The Merge certainly has opened up new doors for opportunities and incentives that have the potential to stimulate further demand, while reducing global energy consumption and creating tangible benefits for stakeholders – something that was previously unattainable before POS implementation on the network of Ethereum.
Eco -conscious artists, musicians and brands
The merger has enabled artists, musicians and brands concerned about the environment to accept irreplaceable tokens (NFT) without worrying about high gas fees and Ethereum energy costs. With the transition to the consensus algorithm, Proof-Fo-Stake, Ethereum is one of the most effective blockchain in terms of energy consumption and environmental resistance. This means that miners will be able to better manage their operations, which will lead to higher profits and stimulate the continuous development of the platform.
Ecologically conscious artists can now benefit from a reliable system that is secure, decentralized and resistant to censorship while minimizing its environmental impact. They can also receive remuneration as a payment for their work in an automated way, without the need for manual intervention – all of this at a small part of the price of traditional methods due to the low gas fees.
The last thoughts
The merger was a huge success for Ethereum, launching an era of energy efficiency and environmental resistance. It is clear that the transition to a consensus algorithm for evidence of a bet will have widespread consequences not only for the future of Ethereum, but also for blockchain technology as a whole. With lower energy costs, increased security, decentralized system without confidence and low gas fees, Ethereum 2.0 can simply attract the attention of institutional investors. It is safe to say that the successful implementation of Ethereum’s POS marks the beginning of an exciting new chapter!
