The Ethereum Merge has been completed on schedule, transitioning the network consensus mechanism from the resource-exhaustive proof-of-work (PoW) mechanism to the more energy-efficient and environmentally sustainable proof-of-stake (PoS) mechanism.
Explaining the move in layman’s terms, Justin Drake, a researcher at the non-profit Ethereum Foundation, compares it to switching out an engine from a running car. “I like to think of it as kind of like the switch from gasoline to electric,” he said.
Tim Beiko, another Ethereum developer at the non-profit Ethereum Foundation, says the energy consumption of proof-of-stake is “not even a rounding error in terms of environmental impact.”
Others compare the energy cost perspective to Finland shutting off its power grid.
A new report from CCRI (Crypto Carbon Ratings Institute), commissioned by ConsenSys, reveals that “the transition from Proof of Work to Proof of Stake has reduced the electricity consumption and carbon footprint of the Ethereum network by over 99.988 % and 99.992%, respectively.”
In addition to taking up much less energy, proof-of-stake also makes it easier for users to participate in running the network, enabling further decentralization and heightened security, and enjoy a fairer market, as the price of ETH is expected to go up now that its issuance will decrease by about 90%.
Mining is now a thing of the past, as users move on to staking ETH to validate the network. The new process sends a minimum of 32 ETH to an address on the Ethereum network where they cannot be bought or sold.
Similar to lottery tickets, the more ETH a validator stakes, the more likely their chances of winning, giving them the ability to write a “block” of transactions and effectively take part in the network’s decision-making.
“Proof-of-work is a mechanism by which you take physical resources and you convert them into security for the network. If you want your network to be more secure, you need more of those physical resources,” Beiko explained. “On proof-of-stake, what we do is we use financial resources to convert to security.”
It also makes attacking the network more expensive, as hackers and malicious actors can have their valuable staked ETH slashed, or reduced, as punishment.
The Merge was aired live on YouTube, as hundreds of people tuned in to the “Ethereum Mainnet Merge Viewing Party.”
There, Vitalik Buterin, Ethereum’s co-creator, noted that although “this is the first step in Ethereum’s big journey towards being a very mature system, there are still steps left to go.” Next steps include “sharding”, a method that speeds up the network by dividing transactions into multiple chains, like lanes on a highway.
As the Ethereum Foundation puts it: “With shard chains, validators only need to store/run data for the shard they’re validating, not the entire network (like what happens today). This speeds things up and drastically reduces hardware requirements.”
Buterin continued: “To me, the Merge just symbolizes the difference between early stage Ethereum, and the Ethereum we’ve always wanted … to become,” he said on Thursday’s live stream. “So let’s go build out all of the other parts of this ecosystem and turn Ethereum into what we want it to be.”
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