A recent report from the Ethereum Enterprise Alliance (EEA) highlights how the Ethereum ecosystem has matured so that enterprises can use the network to solve real-world problems. From supply chain management use cases to payment solutions used by companies like Visa and PayPal, the report shows how the Ethereum network has become one of the most popular public blockchains.
Although worth mentioning, the EEA report also highlights that the rapid growth of the Ethereum ecosystem has created several challenges for businesses, including power consumption, scalability, and privacy. For example, the document states that “sustainability was cited as one of the main concerns, along with transaction fees, regarding the use of the Ethereum mainnet.” The report also explains that the transparency of public blockchains like Ethereum has been an obstacle for companies seeking data security and trust.
Therefore, upgrades such as scaling and Layer 2 (L2) scaling solutions are still essential for businesses using the Ethereum network. But the complex nature of these implementations is difficult for businesses to manage. For example, the EEA report states that “many Tier 2 and side chains they are relatively new projects, with relatively new technology. They don’t necessarily have a proven track record or mainnet security and stability. »
Merge will change the way businesses see Ethereum
However, industry experts predict that Ethereum’s upgrade, which is scheduled to take place on September 14, is likely to improve enterprise adoption. Paul Brody, global head of blockchain at EY, told Cointelegraph that while the Merger won’t affect most enterprise use cases currently in use, it will change the way enterprises see Ethereum. He said :
“For years, competing Tier 1 networks have been talking about how Ethereum cannot be merged. Ethereum’s incredible organizational maturity is quietly working in the background to make this happen in a careful and professional manner. As a business, that’s the kind of institutional maturity I want to see.”
Although Merge has been in development for several years, Brody explained that critical infrastructure upgrades should never be missed. Therefore, he believes that this will remain a key point for companies using the Ethereum network. “I think future attempts to push Ethereum aside will not get much airtime in the post-Merger era,” he said.
Although it is too early to detect how companies will react to the upgrade, Robert Crozier, chief architect and chief blockchain officer at Allianz Technology, told Cointelegraph that his company will monitor the progress of the upgrade.’ Ethereum to see how it stabilizes certain use cases.
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This is worth pointing out, as Crozier shared that Allianz only considered ethereum (ETH) and Ethereum-based use cases for small-scale experimentation. The insurance giant is currently using Hyperledger Fabric and the Corda decentralized ledger platform to streamline cross-border car insurance claims across Europe. Mr Crozier added:
“At Allianz, our International Motor Claims Settlement product uses Hyperledger Fabric as the core of our Motor Claims Settlement product. We need to understand and be sure that other protocols, like Ethereum, offer the same advantages in terms of ease of use, scalability and finality.”
With the benefits in mind, Brody explained that The Merge will ultimately result in greater scalability and privacy for businesses. “I think we’re entering a new era of enterprise applications. With the evolution of scalability and privacy, it will be possible to comprehensively meet the needs of future business processes,” he said.
Ivan Brakrac, senior strategist in the decentralized financial market at ConsenSys, told Cointelegraph that while the Merger will not directly increase scalability, several planned upgrades to Ethereum will address scalability over the coming years.
For example, Brakrac explained that the transition of the Ethereum network from Proof-of-Work (PoW) to Proof-of-Stake (PoS) is the first step to enable “shard chains”. As Cointelegraph previously reported, shearing is the act of dividing a database, or in this case, the blockchain, into different small chains called shards.
“This will reduce network congestion and increase transaction throughput,” Brakrac noted. This is critical to adoption, as Brody said EY’s enterprise customers looking for supply chain applications for 2-20 million transactions per day will need support. “Pre-Mixed Ether could not have adapted to that,” he said.
In terms of privacy, a report titled “The Merge for institutions,” published by ConsenSys on September 5, states that L2 solutions also address enterprise privacy concerns. Increasing L2s will open up better privacy mechanisms for commercial use cases.
For example, Brody explained that EY has developed a zero-proof L2 scaling solution, called Nightfall, to manage Ethereum’s transaction fee constraints and keep costs low. According to Brody, multiple powerful L2 networks will provide different options for companies that may need more gas and larger transactions. It develops:
“Privacy is starting to unleash a much larger set of use cases for enterprises. For example, instead of issuing a token that represents a batch of products and gives origin information, I can issue a token for each piece of inventory, and then I can manage specific inventory levels of the supply chain through a conglomerate network on Ethereum. “.
In addition to scalability and privacy, sustainability concerns will be addressed once the Merger is implemented. According to Brakrac, Ethereum currently uses a disorderly amount of electricity, noting that the Merge will reduce power consumption by 99.92%. “This will make Ethereum very sustainable in the long term. By design, this makes the network more secure and solves an environmental problem. Which is positive in terms of institutional adoption. “, he declared.
In fact, industry experts believe that the sustainability efforts made by the Merger will be critical to enterprise adoption. Dan Burnett, executive director of the EEA, told Cointelegraph that while L2s and side chains As mitigators of sustainability issues, large organizations with environmental, social and governance goals have tended to build solutions on Ethereum due to its reputation for environmental unsustainability. However, he noted that with these concerns addressed, The Merge could allow the Ethereum trading ecosystem to move forward.
Yorke Rhodes III, Blockchain Co-Founder at Microsoft and EEA Board Member and Treasurer, also told Cointelegraph that The Merge will eliminate one of the main concerns of companies that value the importance of environmental impact, like Microsoft.
“This eliminates one of the main arguments that companies raise when evaluating whether to build solutions on the Ethereum mainnet,” he said. Like Rhodes, Crozier mentioned that moving to a more environmentally friendly Proof of Stake mechanism would mean some companies, like Allianz, taking a second look at Ethereum.
Benefits are not immediate
All things considered, The Merge will likely increase business interest in Ethereum due to the advancement of the network. In addition, Rhodes believes that the removal of the critical persistence criticism will encourage further movement towards the Ethereum mainnet, even if only as a basic security layer. “As a key step in realizing Ethereum’s vision, the Merge sets things up for closer scrutiny by companies sooner rather than later,” he said.
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However, it is important to point out that the benefits promised by Merge will not be seen immediately. According to Brody, it will take at least 12-24 months to establish privacy use cases after Merger. He said :
“I hope to see pilots by the end of the year, but feedback loops and infrastructure maturity take a lot of time. Unlike consumer applications, enterprise customers have little patience for products that don’t work the first time and little willingness to experiment. Enterprise buyers are generally quite conservative, so the cycle will be longer than for consumer users.”
