Erik Weijers, 2 months ago
The most anticipated event in crypto in years has been successful. Around 8.45 AM Central European Time, Ethereum switched from proof-of-work consensus mechanism to proof-of-stake.
In a livestream joined by journalists, developers and Vitalik himself, the words 'POS activated' flashed on the screen, together with the hugging panda's symbolizing the successful event. The first epochs after the Merge were nervously cheered on: this was the most critical time.
With the Merge, the main thing that has changed now, is that there will be less Ether issuance, and Ether might even become slightly deflationary. Second, and perhaps more importantly, Ether will become the biggest blockchain that will generate yield for investors/stakers. This might drive the price higher in the long run. (In the hour after the Merge, the price of Ether hasn't moved much: it's up 2%.) This all with a more than 99% lower energy usage.
'It kind of feels the end of a cycle'. one commenter said. 'But this is the beginning of a cycle. Only now we have a solid ground to where we want to be'. Vitalik Buterin added: 'Thanks everyone. Now we can become a mature system. Now we can start working on scaling, privacy, etc...'
The atmosphere at the Ethereum Foundation livestream, witnessed by over 40 thousand viewers, was understandably a tad self-congratulatory. But deservedly so. It went better than expected, without any wrinkles.
A few attendees pointed out that this was the first 'hot swap' of a billion-dollar blockchain between two radically different consensus mechanisms. Vitalik has pointed to the fact that the jump in the amount of software complexity between PoW en PoS is one or two orders of magnitude (10x – 100x).
The Merge happened without a glitch, without users who didn't follow it realizing anything changed. But everything changed. This merge has required hundreds of developers working on it over the course of more than five years.
The miners can now switch off their equipment, or, alternatively they are free to support the potential Eth PoW fork or even the Ethereum Classic fork. 'Thanks, miners!' was the sentiment of the developers. They made the first generation of Ethereum possible by securing everyone's transactions.
Read more about the Ethereum road map for the coming years.
The fact that the first blocks proceeded successfully, doesn't mean that no issues will pop up in the coming weeks and months. In a complex system such as this, there are some ‘unknown unknowns’ that we can’t immediately rule out. Consider the 7 block reorg (temporary fork) that occurred on the Beacon Chain in May 2022. It was the consequence of different clients running different updates. It wasn’t anything serious and it probably won’t happen again now that it is known what caused it. But still. Also, while users can't withdraw their staked ETH yet - this will take another six months or longer - the risk of centralization by staking pools still exists. This critique of being too centralized is taken seriously by Ethereum developers.
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