The Next Big Questions After The Ethereum Merge
Here Is Saying Good A. M To Everyone
Finally, the long-anticipated merge happened and it was successful. Thanks to the group of the resilient team behind the project. The merge took place in the early hours of Thursday(15/09/033) or late Wednesday (14/09/022 ) depending on your time zone. The merge completed perfectly, ushering in the Ethereum Proof-of-Stake era and permanently changing both the way ETH is created and how transactions on the Ethereum network are verified.
With the merge perfected, Ethereum has now done away with the energy-intensive process of crypto mining on its Blockchain (Proof of Work) and instead introduced “staking”(proof of Stake) which requires ETH holders to pledge/stake their assets to the network in exchange for passive yield. This implies that Ethereum now uses 99.95 less energy than before. This is a huge win for the environment, and the Ethereum organization.
Now that the merge is complete, what are the next things? Lots of questions are cropping up! The question of EthereumPoW (ETHW)? What is Sharding? How decentralized will Ethereum be, Post Merge? And what is the next upgrade. This article will try to answer these questions and also comment on how it will affect the crypto space in general.
EthereumPoW (ETHW)
Presumptions before the merge were that there may or may not be a Fork following the merge. (A fork is a new Chain/Token, born out of a major upgrade).
EthereumPoW is a replica of the Ethereum network’s proof-of-work(PoW) Blockchain as it was before transitioning to a proof-of-stake(PoS) consensus mechanism. This Blockchain is supported by mining groups who are unable to earn rewards through Ethereum’s new protocol.
ETHW is a new Cryptocurrency that was created as a result of the Ethereum upgrade from Proof of Work to Proof of Stake. It can be used to pay transaction fees, earn mining rewards, and purchase goods and services from decentralized applications (dApps) built on the EthereumPoW platform. This Cryptocurrency is now trading at around $6.56 (as of the time of writing) and Investors can currently trade the asset on major exchanges including FTX and Bybit.
What Is Sharding?
Sharding which is a common concept in computer science is the method of splitting a database horizontally to spread the load. The aim is to reduce network congestion and increase transactions per second. In an Ethereum context, “sharding will work synergistically with layer 2 rollups by splitting up the burden of handling the large amount of data needed by rollups over the entire network”. (Rollups are a “layer 2” technology that exists today.)
According to Ethereum.org, Sharding could ship sometime in 2023. It will give Ethereum more capacity to store and access data, but it won’t be used for executing code.
Why Sharding?
- Sharding is a good way to scale if you want to keep things decentralized.
- With Sharding, Validators will no longer be required to store all of this data themselves.
- Sharding will eventually let you run Ethereum on a personal laptop or phone.
- Will increase security, because the more decentralized the network, the smaller the attack on surface area.
- Will lead to lower hardware requirements, to run clients on your own.
- Sharding provides secure distribution of data storage requirements, enabling rollups to be even cheaper, and making nodes easier to operate
For more on Sharding, visit
The Question Of Decentralization After The Merge.
It is no news that the idea of Decentralization is a key purpose of crypto and Web3 as a whole. But with Ethereum doing away with miners’ Proof of Work Consensus Mechanism and adopting Proof of Stake, validators will now be required to stake or pledge at least 32 ETH to the network, before they can be eligible to verify transactions. These have necessitated smaller groups to create staking pools to combine their ETH to become validators or join an exchange that offers to stake. There’s roughly $21B worth of Ethereum being staked now.
Since proof-of-stake depends more on users buying, holding, and staking huge amounts of the ETH. Some analysts have described the merge as a move toward centralization. The fear is that one or two central organizations would be able to control who processes transactions, which transactions are processed, and what future upgrades are made.
A recent Dune Analytics report confirms that the two biggest stakers of Ethereum are currently Lido with 4.16 million ETH (30.1%) and Coinbase with 2 million ETH (14.5%). The remaining stakers, categorized as “other,” have 3.65 million ETH (26.5%).
When is the Ethereum Shanghai Update?
The Shanghai Update is tipped to be the next major update on the Ethereum network. The upgrade is expected to happen sometime in 2023. With so much attention on the just concluded Ethereum Merge, the Shanghai update seems to be a bit unknown. Here’s what to know about the Shanghai update.
According to Tim Beiko (one of Ethereum’s core developers), the Shanghai update is set to address 3 significant issues surrounding Ethereum. These issues include; changes in the EVM object format, Beacon Chain withdrawals, and Layer 2 fee reduction. Let’s explain further;
- The EVM object format will isolate the code from the data. This could be very helpful for the on-chain validators.
- For the Beacon Chain Withdrawal delay, the update will allow Ethereum holders to withdraw their deposited ETH, which previously wasn’t possible.
- Lastly, for the layer 2 fee reduction, the upgrade introduces changes that will effectively reduce the popular gas prices of Ethereum. The modifications will be made by equalizing the block sizes and expanding the CALL DATA functionality of the block.
Conclusion
While the Ethereum merge was a success, these and many other questions will continue to shape the discussion surrounding Ethereum and its ecosystem.
I hope you got value from this Article. Don’t forget to leave your thoughts in the comments section.
Note: A.M here stands for After merge, while B.M stands for Before Merge.
This article is specifically for information purposes and should never be regarded as financial advice.
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