Last week, the second crypto currency per market value, Ethereum, reached an important milestone. Developers have: portato a termine The Merge:. The merger was in the works for years and, although it was an important result, the Ethereum community still has a lot of work to do if it wants to scale the blockchain further. In fact, an important update could happen in 2023. Here’s what investors should expect.
Results of The Merge:
The main result of The Merge is the transition of Ethereum from a proof-of-work governance mechanism to a proof-of-stake mechanism.
The mechanism of proof of work was the original modo in which the network was managed by the blockchain, and it is still used by the pioneer of the blockchain Bitcoin, the largest cryptocurrency per market value. With this type of mechanism, the mining rigs – at this point, usually an array of specially designed computers – try to solve the cryptographic puzzle as fast as possible to have the opportunity to validate the transactions that have arrived through the network and add new blocks to it. blockchain.
In cambio, questi minatori ricevono dei token. With the increase in the prices of tokens, especially among the largest cryptocurrencies, the competition to solve these cryptographic puzzles has intensified, requiring miners to use tons of computing power and hardware to solve them. Ciò rende i protocolli proof-of-work extremely intensivi dal pointo di vista energetico e quindi dannosi per l’ambiente.
In a proof-of-stake protocol, the investors who own the token can “puntarli” – in essence, blocking for a certain period in order to lend money to others. In this way, the owners of the tokens entered a system similar to a lottery to have the possibility to validate the transactions and form new blocks. For their contributions, those who put their token on the network will receive a certain amount of Ethereum based on a formula on a mobile scale.
The transition to proof of stake not only makes Ethereum much more efficient from an energy point of view, but it will also reduce the amount of Ether allocated to validators per block, effectively slowing the growth of the Ether supply and potentially contributing to its decline over time. . This could make the price go up.
What to expect in 2023?
It is difficult to know when exactly the sharding will happen or it will be completed in 2023. It will be realized in two different phases and the Ethereum website lists it as an event of 2023-2024 in some pages.
In addition, it seems that some aspects of the implementation of sharding are still being discussed among the developers, so I’m waiting for some time. Anche se può essere difficile essere pasenti, per la sostenibilità e il longo termine di Ethereum è importante che gli developtori riscano fare bene questi updates.
The investors should also take a breather and give credit to the developers for having just completed the merger. It’s not a facile undertaking, but it’s a test of how much the developers are capable of. This gives me confidence in the fact that the sharding will be realized correctly and in the most timely manner possible.