Here are some things that will (and won’t) change after the Merge.
An under-the-radar rendezvous of core Ethereum developers took place in Greece last week, with major progress being made toward the Merge.
According to ConsenSys’ Ben Edgington, a Beacon Chain developer, the teams accomplished the transition of a multi-client devnet from proof-of-work to proof-of-stake. Eth1 execution clients and Eth2 consensus clients successfully merged to create a network capable of processing transactions.
This news comes shortly after the announcement of Altair’s coming upgrade on Oct. 27. The Altair upgrade is a significant step in the transition to proof-of-stake, giving developers a “low stakes warm-up” and further functionality on the Beacon Chain. While the puzzle that is the Merge seemingly moved slowly at first, it is beginning to fall into place all at once.
As we approach the eventual transition to proof-of-stake, it is important to note what the upgrade will change and what will stay the same.
Immediate impacts on users and the overall network:
Energy efficiency
Proof-of-stake allows validators to propose and validate blocks without using the energy currently required to mine these blocks. Proof-of-work miners are required to “compete” for blocks, incentivizing them to invest in advanced hardware and more energy usage than their mining peers. Proof-of-stake consensus randomly distributes block proposal opportunities to validators on the network, alleviating some of the competition that is so prominent in proof-of-work.
Transition away from economy of scale
Going hand in hand with energy efficiency, the need for expensive mining equipment and access to energy allows mining pools and large miners to dominate the network. While economies of scale will almost always arise, proof-of-stake allows users with arguably smaller initial investments to become validators on the network. In theory, this counters centralization and adds increased security to Ethereum as validators become diverse and widespread.
Ether emissions fall
The economics of Ethereum under proof-of-stake will differ from its current status. Ether rewards will depend on a variety of factors throughout the network, but the emission rate is expected to fall below the 2 ether block reward currently issued under proof-of-work.
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