Joe Lubin & Other Experts Discuss the Effects of the Ethereum Merge

Joe Lubin & Other Experts Discuss the Effects of the Ethereum Merge

Ethereum News
September 19, 2022 by Diana Ambolis
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The Merge, a planned Ethereum upgrade on September 15, is frequently referred to as “the biggest cryptocurrency event ever.” The shift from proof-of-work (PoW) to proof-of-stake (PoS) is predicted to occur within the next several years. Numerous industry watchers think the update will have far-reaching impacts, including a substantial decrease in Ethereum’s energy usage and
What Is Wrapped Ether (wETH) And How does It Work?

The Merge, a planned Ethereum upgrade on September 15, is frequently referred to as “the biggest cryptocurrency event ever.” The shift from proof-of-work (PoW) to proof-of-stake (PoS) is predicted to occur within the next several years. Numerous industry watchers think the update will have far-reaching impacts, including a substantial decrease in Ethereum’s energy usage and an influence on the price of cryptocurrencies and institutional adoption. However, the complete maturation of these effects might take years. Joe Lubin, the co-founder of Ethereum and CEO of ConsenSys, said, “The Merge is the only worldwide example of how a decentralized system can reduce its carbon footprint by 99.99%.” ” The Merge exemplifies how a decentralized system may lower its carbon footprint by more than 999.999%.” “The Merge is the result of years of decentralized collaboration and innovation, which will enhance the network’s future security and scalability.” It will assist in establishing the foundation of trust in society.” The Merge accelerates the system’s path toward extensive decentralization—since, as Lubin said, decentralization is the source of confidence—and toward a society where a large number of new people and small organizations will have more economic and political autonomy.

Possible Consequences of Decreasing Energy Use

The change from Proof-of-Work (PoW) to Proof-of-Stake (PoS) and the associated reduction in Ethereum’s energy consumption may have a variety of ramifications. According to Digiconomist, Ethereum’s annualized carbon footprint is equivalent to Hong Kong’s, and its energy consumption is comparable to Chile’s. Moreover, Ethereum’s overall energy usage is similar to that of Chile.

According to Louis Schoeman, general director of Forex Suggest, the reduction in energy use is “perhaps the most significant crypto event since Ethereum’s inception.” Ethereum was the first ever-produced cryptocurrency.

According to Schoeman’s foreign currency market analysis, a single Ethereum transaction generates more than 93 pounds of CO2 emissions. This indicates that all Ethereum transactions in the preceding year generated around 22 million tonnes of CO2 emissions, which could mitigate by planting 109.8 million trees.

According to Schoeman, assuming a 99% reduction in energy use, 108.7 million of these trees will be saved the next year and will reduce CO2 emissions to 222,222 tonnes. When climate change is at the top of the global agenda, blockchain use may increase if one of the most popular blockchains were less hazardous to the environment.

Even if the upgrade angers miners, it will be more difficult for people who criticize cryptocurrencies for being ecologically hazardous to use this argument against them. This might make Ethereum projects more ESG-compliant (environmental, social, and governance), increasing institutional acceptance and enabling the growth of decentralized finance. Ultimately, this would be advantageous (DeFi).

The implementation of proof-of-stake will reduce Ethereum’s total energy consumption by 99.9 per cent, which will have a substantial and favourable effect. According to Likvidi’s director of platform development, Junnu Salovaara, “It will now live alongside other energy-efficient protocols, such as Tezos, Solana, and Algorand, as examples.”

Given that it is the world’s second-largest blockchain by a significant margin, it allows blockchain companies to seek a permanent home. Historically, a single transaction required enough energy to power an average American home for a week. After the Merge, it will more accurately resemble a kettle boiling.

Consequently, will Ethereum become the “most deflationary” currency? What Effect Will This Have on the Price of Cryptocurrency?

As stated by the Ethereum Foundation, Proof-of-Stake (PoS) requires validators to deposit Ether (ETH) into an Ethereum-based smart contract. Anyone may become a validator by contributing 32 ETH, or about $52,000, as of September 13.

The foundation says, “This staked Ether acts as collateral, which may be forfeited if the validator conducts dishonestly or irresponsibly.”   might forfeit this collateral if the validator engages in dishonest or careless conduct.” The validator is then tasked with verifying the integrity of newly sent network blocks.” Moreover, the validator may sometimes generate and distribute additional blocks. “According to Lucas Outumuro, director of research for blockchain analytics company IntoTheBlock, this may make Ether “the most deflationary currency.” The foundation expects the supply of new Ether to decline by 90 per cent, making it rarer. IntoTheBlock gave this material to Fortune.

At least relative to other cryptocurrencies, Freddy Zwanzger, the chief executive officer of Ethereum’s ecosystem at crypto infrastructure firm Blockdaemon, predicts fundamental price implications in the coming months. With a 90% drop in ETH supply and an approximate doubling of validator revenue in the next few months, while withdrawals remain prohibited, fundamental price consequences are also anticipated. “These factors may affect the wider crypto narrative by establishing PoS as a credible alternative to PoW, which has been dominated by Bitcoin, and by establishing ETH as “ultrasound money” with no or even negative inflation after the Merge,” said a researcher.

According to Ledn’s chief strategy officer and co-founder, Mauricio Di Bartolomeo, this will result in a “seismic change” in decentralized application infrastructure. This “seismic shift” is anticipated to have a secondary effect on the native assets of rival blockchains compared to Ethereum.

Di Bartolomeo claims that other point-of-sale blockchains, such as Solana and Avalanche, arose in 2021 and 2022 due to the promise of faster transactions, reduced transaction costs, and more capacity. As soon as ETH adopts the same consensus procedure, these objections will become irrelevant, and a great deal of commercial and development activity will return to the Ethereum network.

Also read: Ethereum Merge Benefits And What To Expect After The Merge

Will This Make the Area Slightly Safer and More Secure?

It depends on the individual being interrogated.

ConsenSys predicts that, at the present rate, the cost of hacking the Ethereum blockchain will surpass $11 billion. This is about [10 to 20 times as costly as PoW]. ConsenSys believes that the Merge will boost Ethereum’s security, bolstering institutional investors’ safety guarantees. In addition, the research predicts that the network’s security will rise over time as more validators join the network and more ETH is staked.

According to Ari Redbord, director of legal and government relations at blockchain intelligence business TRM Labs, the Merge is a software upgrade that affects the way transactions are completed on one of the two blockchains regarded as the most important in the cryptocurrency sector.

Nonetheless, will the danger be neutralized?

Redbord recognized the existence of other perspectives. The proof-of-The system would be safer if it were regulated by those with a more robust “skin in the game.” It’s conceivable that we won’t see the full impact immediately, but this has long been envisioned as Ethereum’s future. It’s great to see it finally materialize.

Additionally, he said that buyers must be more vigilant than before.”

As with every significant event in the world of cryptocurrencies, including The Merge, customers should look for fraudulent activity. Even though there are no current plans for an official token airdrop or an ‘ETH2’ merging token, fraudulent token airdrop schemes may be connected with The Merge. The reporting and crowdsourcing of fraudulent behaviours on Chainabuse.com are of the highest quality.

How much longer must we wait before we can fully comprehend the repercussions of the recent developments?

Numerous informed folks agree that “probably” is the correct response. Even though The Merge is a clear turning point in the cryptosphere that has been described as “seismic” and is a technological wonder and engineering accomplishment of tremendous proportions, future advancements may be more significant.

Garry Krugljakow, the inventor of the GOGO Protocol, has said that The Merge is one of the most critical technical advancements in the history of blockchain networks. Will predict the successful completion of The Merge to launch a sequence of subsequent advancements that will provide substantial usefulness for DeFi, NFTs, and other applications.

Even though the Merge will not instantly make Ethereum faster or cheaper, according to Krugljakow, it will provide the groundwork for future enhancements to achieve these objectives. Due to this, the event is seen as exceedingly significant.

According to Tara Annison, director of the technical crypto consulting at Elliptic, when Ethereum moves to PoS, very little, if anything, will change for the overwhelming bulk of the ecosystem. Even though the Merge is now the centre of attention, it is essential to comprehend this.

According to Annison, “whether you operate a DeFi company, manage a cryptocurrency exchange, or have produced anything on Ethereum, life before and after the Merge is comparable.”

Annison said that developments that would revolutionize the world would occur in the future, with the rollup-centric approach aiming to increase scalability while lowering node resource requirements.

Annison claims it will achieve this by combining the “Verge, Surge, Purge, and Splurge” components into future upgrades. Therefore, will The Merge directly affect Ethereum or the cryptocurrency ecosystem? Largely no. It indicates that the No. 2 blockchain can now deliver on its upgrade promises and represents significant industry development. However, the original and engaging stuff is still to come.

Numerous knowledgeable people concur with the opinion. Yaoqi Jia, the creator and CEO of AltLayer compares The Merge to a background update that occurs as the user sleeps. According to Jia, “upgrading from programme XYZ 9.1 to 9.2 is excellent and demonstrates a developer’s commitment to gradual improvement and feedback,” but “it’s hardly new.”

We see significant gains in aggregating several minor network adjustments. Ethereum has the same characteristics. Expect the bitcoin ecosystem to remain unchanged on September 15, but have a favourable perspective on its prospects over the next five to ten years.