Ethereum completes the long-awaited “Merge” update for energy saving. The blockchain network has completed the biggest and most ambitious update in the cryptocurrency worldas its co-founder Vitalik Buterin tweeted.
The completed process, called “Merge”, replaced the energy-intensive computers used to sort transactions on the network with a more energy-efficient configuration, using the network’s native token, Ether, placed in special wallets, the so-called staking wallet. Consequentially the energy consumption of Ethereum will be reduced by approximately 99%. Such an upheaval has never been attempted before in a cryptocurrency, much less on Ethereum, home to some 3,500 active decentralized applications, ranging from exchanges to games and applications and handling billions of billions of dollars worth of cryptocurrencies.
Buterin tweeted that with the Merge, electricity consumption will be reduced by 0.2% globally.
The Merge è la transizione da proof-of-work (PoW) a proof-of-stake (PoS). In the works for years, the Merge does not change the end user experience on Ethereum, but it is a stepping stone for other updates that will make the network faster and cheaper. The merger also changed the properties of Ether, making it more like an interest-bearing security. The Ether staked will generate a return, which after the merger is expected to be around 5.2%, according to tracker Staking Rewards. The software update is called Merge because Ethereum’s existing blockchain will combine with a parallel network that has been in operation for nearly two years to test the proof-of-stake concept.
Reflections on Ether prices
In terms of ETH’s “tokenomics”, the merger and switch to PoS could be good for ETH’s price for several reasons, he says Simon Peters, crypto markets analyst di eToro. First, issuance – the amount of new ETH coming into circulation – will drop significantly, with estimates currently hovering around 90%.
Secondly, a minimal commission must be paid to the network to execute transactions. This commission will be “burned” in the process, removing it from circulation. Burning ETH will leave less cryptocurrency circulating in the system over time.
Third, holders can start staking, a form of passive reward for contributing to network security. Again, ETH will exit the outstanding offer. “In short, ETH could go into deflation. Lower supply and higher demand for ETH could drive the price up after the merger, as scarcity will begin to weigh on token circulation, such as when central banks raise interest rates and slow down processes such as quantitative easing, ”Peters concludes.