The Merge: the crypto industry after the transition of Ethereum to PoS
Recently, Ethereum switched to a new consensus algorithm, a positive surge for the crypto community given that the Merge update has been in the making for years and the transition to the Proof-of-Stake algorithm still took place. Now experts are trying to answer the question: what awaits in the crypto industry after the global transformation of Ethereum?
As analyst Evin Cheikosman, who wrote a piece on the Ethereum transition for the World Economic Forum (WEF), points out, one of the main effects of the merger will be energy consumption changes.
Ethereum has tens of thousands of Web3 projects based on the blockchain and over 70 million wallets tied to the network. Therefore, the total capitalization of the cryptocurrency exceeds $174 billion. And all this, until recently, rested on the shoulders of the mining industry, an area with high electricity costs.
With the transition of Ethereum to the PoS algorithm, the situation is changing dramatically. and according to preliminary estimates, the network’s energy consumption has decreased by 96.3%.
In August, the annual network consumption stood at 93.95 TWh, comparable to the electricity consumption of a large European state; after the merger, one transaction accounts for 8.7 kWh — the same amount consumed by the average American household in 8 hours.
In 2022, the cryptocurrency industry’s security issues have become more relevant than ever, with another hack and theft of digital assets every day, with $2 billion stolen by hackers over the past seven months
Justin Drake, one of the key figures in the ETH migration, speaks of a much higher degree of protection after the network upgrade. According to him, a potential attacker would need 51% of the value of the blockchain to organize a full-scale attack on Ethereum.
In banknotes language, the following can be a good example:
- when using the Proof-of-Work algorithm, hackers needed about $5 billion for a crushing raid. This money would go to purchase equipment, total energy consumption, and human resources.
- switching to Proof-of-Stake, as Buterin himself repeatedly mentioned, automatically raises the stakes. At first, Drake calculated the theoretical cost of a full-scale attack as $20 billion.
Over time, these numbers will grow. The transition has proven that the blockchain successfully adapts to the new game rules, and the network functions stably. Ethereum is now starting to gain weight while simultaneously increasing the cost of the attack
The developers also remind you that the merge should not be considered a one-time event. Although the transition has officially happened, work is in full swing inside the network.
The Ethereum team has outlined a roadmap to develop security, decentralization, and speed aspects.
While the Ethereum team is improving the blockchain we are announcing the Incentivized testnet launch for ParaState’s ETH2.0 PoS staking platform- SafeStake.
SafeStake offers a superior experience for participants, node operators, and the whole ETH ecosystem with the two stages of the Galileo Testnet, where the reward pool is up to 5 000 000 STATE tokens. The result of this testnet will indicate the well-coordinated work of the SafeStake team.
Read the article to know the guidelines, selection criteria, and rewards!
About ParaState
ParaState takes Ethereum chain support to the next level through WasmEdge, developing and executing high-speed smart contracts with built-in Ethereum compatibility (EVM and EWASM) and interoperability in next-level programming languages like Rust, C ++, and Golang.
Parastate is participating in ETH2.0 PoS Staking with a new tech stack called SafeStake, a trust-minimized, middle-layer fostering the decentralization of ETH2.0 staking. SafeStake is a non-custodial infrastructure for distributed validator technology written in Rust, implementing HotStuff consensus and Threshold signing architecture to provide more robust security for ETH 2.0 PoS.
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