Ethereum (ETH) is the second blockchain in the world. Observers, investors and fans of cryptocurrencies pay close attention to every news about its infrastructure. While critical Ethereum migrations and updates sometimes take years to develop, that may not be the case this time.
In fact, more and more sources seem to indicate a new update on the ERC20 blockchain for the first quarter of 2023, a few months later. The Merger, just implemented in September, with its controversial consequences. While some users are starting to get used to the new standards generated by The Merge, how does the Ethereum blockchain plan to evolve in the coming months?
The Merger: yet another recent upheaval
Long story short, in September 2022, the Ethereum network was upgraded to its ETH2.0/Phase 1 version, changing the way it works from Proof of Work (PoW) to Proof of Stake (PoS). These two modes of operation determine the way new blocks are generated in a blockchain.
With PoW, the original operation of Ethereum, the computing power provided by some users with very powerful computers, is used to solve the increasingly complex transaction calculations of the blockchain. Alternatively, these minors get rewarded by getting newly created tokens.
With PoS, it is no longer the power of the engines that matters, but the number of properties it possesses. In short, more is more the collector has tokens to lend to the blockchain, it is more likely to be chosen to create a new block (this limits the competition). He will earn a portion of the transaction fees generated by this new block and the transactions listed in it.
In theory, the transition is from PoW to PoS save energy resources (no need to run overpowered machines continuously, nor the need to use miners), we are talking about energy savings of up to 99%!
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What happens to minors?
With the Proof of Stake mechanism, minors become useless, and they are facing a big problem, which is the loss of their expensive investments in very specific mining machines and graphics cards.
The price of the graphics cards fell almost 40% approaching the Merger, which gamers who saw with a very low attitude the prices rising due to Ethereum miners are very happy.
Some of the miners have sold their equipment in an effort to get ETH tokens to stack, in order to continue their activity in a different way with PoS, for other ilts, they tried to continue a fork using the POW mechanism.
How does The Merge affect users?
It would seem that Ethereum is now benefiting from a better transaction liquidity, block time has been reduced by 10% since The Merge. As for transaction fees, they have returned to their level of two years ago.
this a statement is to be sworn anyway, because the exorbitant Ethereum blockchain fees in 2021 were justified due to the transaction saturation associated with the bull run and NFT activity. It is therefore worth monitoring how Ethereum would react to a large number of new transactions.
It would therefore appear that The Merge THE historical migration of Ethereum, and for some, the ETH blockchain would now be much closer to being a complete product. This is not at all the opinion of Vitalik Buterin, its founder, who believes:
Ethereum is only at 55% of its development and soon evolution plans at the height of The Merge.
Following Vitalik Buterin’s plan, which suggests that the Ethereum route will have many more updates such as The Merge, the protocol Shanghai is expected to take place in March 2023.
Shanghai update, in general, it will allow collectors to access their staked ETH, and remove them. Remember that the move to Proof-of-Stake from the Merger requires the validators (those who have staked their tokens on the resolution of the operations), who replaced the miners, to block a certain number of tokens to be rewarded in percentages of transaction fees. .
Ethereum developers are prioritizing Beacon Chain withdrawals for the next major upgrade of the ‘Shanghai’ network 🚀
Shanghai is expected to go live in the second half of 2023. pic.twitter.com/d74HQdekLS
— The Defiant (@DefiantNews) December 8, 2022
the The network of collectors was warned that when The Merge is effective, they could not withdraw their tokens directly (logically, the blockchain must be guaranteed enough liquidity for it to work smoothly).
Therefore the collectors’ tokens are now blocked, and Shanghai should remedy this, by allowing them to withdraw (to get them out of the betting pools).
What are the risks associated with Shanghai?
The big risk is Shanghai liquidity drain. Some observers feared that when this future update was announced, a massive withdrawal of ETH would occur, leading to a significant drop in the price of the token.
However, the network has already announced that these new possibilities granted to collectors will be implemented at the same time as certain limits, such as a maximum withdrawal limit. Therefore, they are the maximum bet marks that can be withdrawn 43200 ETH per day, which is already substantial (it should be noted, however, that the ETH balance in question exceeds 10 million).
we so I hope this limit is not reached every day, as this may affect the price of ETH, especially in the context of a bear market. It should not be forgotten that validators have seen the crypto crash in recent weeks without being able to act on their own tokens, blocked in staking. This is a very frustrating situation for many of them, as they have seen their inheritance melt away before their eyes without being able to sell a single token.
In the last few days and despite the recent fall of FTX, the ETH token price has increased slightly and stabilized around $1280. This is a far cry from the 2021 amounts or even the $1600 before The Merge or even the $4000 at the beginning of the year. However, ETH is still a cryptocurrency with significant emerging potential.
What will Shanghai bring to other users?
For the majority of users, the implementation of Shanghai should not be felt, with the exception of builders. So far their performance has been reduced by the costs inherent in the Ethereum blockchain, increased by the software they use to obtain the new reward tokens. The Shanghai update should fix the problem.
One more step forward
One could think that the implementation of the plan Shanghai completes and finalizes The Merge, to give Ethereum all the scale and infrastructure to overcome its destiny, and compete with Bitcoin.
However, Vitalik Buterin reiterated it to us some time ago revealing a roadmap that had been kept secret until now. The Merger is just the first big step aiming for a thorough overhaul of Ethereum.
Other big changes are coming. Will first of all The Surge, this change will aim to focus on the significant improvement of the blockchain, through the fragmentation of data. Then there are The Scourge, The Verge, The Purge, and The Splurge other big updates to come. In short, the Ethereum shuttle has left us on a journey that we are only at the beginning of!
Vitalik Buterin recently talked about it in detail The Barn the third major update to come after The Merge. If you want to learn more, it’s here!