The Merge is Here and NFTs on Ethereum just became sustainable
Ethereum’s long-awaited transition from Proof of Work (PoW) to Proof of Stake (PoS) is almost complete.
The Merge looks set to make Ethereum more scalable, secure, and most importantly… more sustainable than ever before.
That’s why in a few days we’re launching our Origins Collection NFTs on Ethereum, combining the world’s first carbonised NFTs with the world’s most popular PoS protocol.
How Did We Get Here?
When Ethereum co-founder Vitalik Buterin wrote in 2014 that, “we may choose later on to adopt alternative consensus strategies, such as hybrid proof of stake”, it’s unlikely he imagined it would take over 7 years.
First slated for 2016, The Merge has offered a tantalising remedy to the carbon-intensive nature of most cryptocurrencies. Presently, Ethereum’s annual energy consumption is estimated to be as high as Finland’s, while Bitcoin’s is estimated to equal a country with a population 4 times larger: Argentina.
PoW protocols like Bitcoin, pre-Merge Ethereum, Dogecoin, Litecoin, and many others have exponential energy demands built into their design. That’s because the way that new transactions are validated is through a system of competing computer networks racing to solve complex mathematical problems which become more complex over time, requiring more computing power to solve.
In PoS however, computing power is replaced with a system of staking. Individuals or companies stake their Ether tokens and are chosen at random to validate transactions, at a dramatically lower energy cost.
A Paradigm Shift
For environmentally-conscious crypto enthusiasts, PoS is a total game changer.
The Merge will mean that the energy consumption of Ethereum will decrease by 99.5%. According to Likvidi’s Head of Platform Development, Junnu Salovaara, “previously a single transaction consumed enough energy to power an average US household for a whole week. Post-merge it’s closer to boiling a kettle.”
That’s especially exciting considering that Ethereum has been a hotbed for innovation in FinTech and DeFi, with over 8000 dApps on the platform already pushing the boundaries of what technology can do. Companies like Likvidi and others who wish to harness blockchain to change the world for the better are now seeing Ethereum as a natural fit.
“In terms of energy consumption it will now sit alongside other protocols that are considered sustainable such as Tezos, Solana and Algorand. Given it’s still the second biggest blockchain in the world by a big margin, it presents an opportunity for sustainable blockchain projects looking for a home,” says Solavaara.
Economies of Scale
Ethereum was envisioned as a blockchain of the people. Its founders were clear in their desire for the price of a transaction to be several cents, rather than dollars. But just as neighbourhoods get less affordable as they get more popular, Ethereum’s fees skyrocketed as people flocked to it during the ICO boom of 2017.
At one point, fees were as high as $200 for a single transaction. They’re currently at $1.19, nowhere near their height but still enough to price many smaller investors and innovators out of the protocol.
Will the Merge fix these problems? Sadly… No. At least not yet. The move to PoS has no effect on network capacity or throughput though it does bring us closer to improvements that will.
According to Vitalik Buterin, post-Merge Ethereum will only be about 55% complete. Further innovations like sharding, where blocks are split into smaller chunks for validation, are expected to bring eventual lower transaction costs. For now, layer 2s such as Arbitrum and others which build on top of Ethereum will plug the gap by offering cheap and fast transactions.
More or Less Secure?
Post-Merge Ethereum is touted to become more secure and less centralised. However, this remains to be seen.
Under PoW, individuals can amass large amounts of computing power in their mining operations which outcompete smaller miners and threaten the decentralisation of the network. But under PoS, with just 30 ETH and a single computer you can take part in the validating process.
On the other hand, PoW advocates have pointed out the fact that a large proportion of the ETH network is already concentrated in a small number of hands. According to blockchain analytics platform Nansen, almost ⅔ of staked ETH is already controlled by Lido Finance, Coinbase, Kraken, and Binance. A bug or social attack like sanctions on any of these players could spell trouble for the whole network.
Climate Champions, We Need YOU!
How The Merge will alter the security and scalability of Ethereum remains to be seen. What is sure however, is that it will become far more sustainable…
With the imminent launch of the world’s first carbonised NFTs, the Origins Collection, you have a chance to help reduce humanity’s impact on the planet.
Holders will be able to stake their NFTs in exchange for carbon credits sourced from projects around the world that take carbon out of the atmosphere. Yes — that means these NFTs actively help fight global warming.
If you want to join the fight against climate change and aid the transition towards a carbon-neutral world, join our waitlist. The Origins NFT drop is just days away. Celebrate sustainable Ethereum with us.