Blockchain
4 min read
Sep 27, 2022
The Ethereum upgrade - one of the most impressive achievements in the blockchain industry, finally has been finished.
"And we finalized it!... Happy merge all! This is a big moment for the Ethereum ecosystem," said Ethereum co-founder Vitalik Buterin in a tweet.
So, what has changed since Ethereum switched to Proof of Stake, except that ETH costs have dropped 20% in the last 7 days.
Since the preparations for the Merge in the Ethereum community have been ongoing for several years, it is currently unlikely that the event itself will cause significant changes in the overall development of Web-3.
There are prerequisites for a positive trend in the NFT segment - as many artists and users have had antipathy towards blockchain technologies due to the environmental impact of high energy consumption. By switching to proof-of-stake, Ethereum became much more eco- friendly. In fact, less than an hour after the Merge was completed, a user spent 36 ETH - about $60,000 - to mint the first NFT on the proof-of-stake network. It is a panda face image called "The Transition."
At the same time, the eco-aspect had a crushing effect on the miners, who appeared to be the most suffered side of the Merge. It is possible that some miners will choose to mine on another chain instead of selling the gear.
Of course, the biggest concern and criticism of the past-merge Ethereum is that it is moving toward centralization. Proof-of-stake depends on users buying, holding and staking large amounts of the network's cryptocurrency.
And while control of the Ethereum network will no longer be concentrated in the hands of a few publicly traded mining syndicates, critics insist that previous powerful players will simply be replaced by new ones. Lido, a kind of community of validators, controls over 30% of the stake on the Ethereum proof-of-stake chain. Coinbase, Kraken, and Binance - the three largest crypto exchanges - own another 30% stake in the network.
“Since the successful completion of the Merge, the majority of the blocks — somewhere around 40% or more — have been built by two addresses belonging to Lido and Coinbase. It isn’t ideal to see more than 40% of blocks being settled by two providers, particularly one that is a centralized service provider (Coinbase)”- explained Ryan Rasmussen, crypto research analyst.
Since decentralization is the main component of Web 3 concepts, this problem should be solved for the successful development of Ethereum and keeping ahead of competitors in the future.
Therefore, the Merge cannot be considered as the final transformation of Ethereum. The challenge is in keeping upgrading the network to adapt it to the decentralization concept and to increase security and speed.
As Buterin admitted, the Merge is just the beginning. "To me, the Merge just symbolizes the difference between early stage Ethereum, and the Ethereum we've always wanted to become," he said. "So let's go build out all of the other parts of this ecosystem and turn Ethereum into what we want it to be.
No matter how much the traditional financial sector resists the advance of cryptocurrencies, they will inevitably take a dominant position in the future. And there is no doubt that the evolving Ethereum is one of the main pillars of this industry.
