Ethereum completed The Merge, starting a new era of Ethereum 2.0 today. With this process, the Ethereum blockchain has officially moved from a proof-of-work (PoW) model to a proof-of-stake (PoS) model, which hopes to improve the security and scalability of the network.
The transition occurred at block 15537393 on September 15 at 1:42:42 a.m. EST. There were no big hiccups, with one exception. A single block was missing, leading some investors to describe the merge event as the best-case scenario.
What's So Important About Ethereum 2.0?
With the move from a proof-of-work (PoW) model to a proof-of-stake (PoS) model, the Ethereum mining will no longer take place. There won't be a need to use energy-intensive computers to create or mine new Ether. As a result, the energy consumption by the Ethereum network will be reduced by 99.95%.
Instead of mining, Ethereum will rely on stakers to secure the network, and this will also open up the act to more individuals. Mining pools have been taking steps to ensure their revenue remains somewhat protected during the transition, as Ethereum was one of their bigger sources. Several have now turned their attention to Ethereum Classic (ETC) and Ravencoin (RVN).
The shift to PoS has long been planned, but the technical scale of the change was something that developers have had to keep in mind. The PoS model is believed to make Ethereum's network more secure and scalable.
Ethereum Price Remains More or Less the Same
Ether's price and the crypto market, generally, have remained unchanged in the hours following 'The Merge,' but its real impact will only be noted in the coming months.
The PoS mechanism is one part of the effort to make Ethereum more scalable, and analysts believe that the coming months will showcase the positive effects.
While 'The Merge' does not focus on reducing transaction fees and increasing speed, it does set it up for future updates that do address those concerns. There are other solutions—Layer 2 scaling solutions—that help deal with those problems.
Crypto Community Reacts With Delight
Unsurprisingly, many prominent individuals in the crypto industry, as well as the community in general, took to social media to celebrate the occasion. Ethereum co-founder Vitalik Buterin said that it was a big moment for the Ethereum ecosystem and that those who worked on it should be very proud.
Yuga Labs, the company behind NFT collections like Bored Ape Yacht Club and CryptoPunks, also congratulated the Ethereum team for their work. Polygon Network co-founder Sandeep Nailwal said that The Merge had taken the network into the “PoS world”—and many agree that a new era has begun. ShapeShift founder Erik Voorhees called it "the most consequential event in crypto’s history" after the release of the Bitcoin whitepaper.
The Bottom Line
By reducing energy by 99.5%, Ethereum is now theoretically more eco-friendly. This has been one of the main talking points of Ethereum 2.0. However, how the upgrade will work in the coming months and how long it will take to address the scalability and gas fee issues remain to be seen.