they came. they saw. they merged. Now that Ethereum has integrated itself into a new consensus mechanism that reduced its power consumption by 99.9% overnight, what happens next?
Shifting to power-hungry Proof of Work was the hardest part of the transition to Ethereum 2.0, the multipart upgrade path for blockchain smart contract launched in 2015.
However, PoS Ethereum is not the final form. There are many proposed features of the global computer network which, like any program, never expired. Ethereum developers have a lot of things they want to improve, but getting them to agree on what features should be bundled with the next upgrade, known as Shanghai, is not easy.
Topping the list is the ability to withdraw accumulated Ether, ETH deposits that bond validators back the network’s rules. But beyond that, nothing is carved into the rock. Some developers want to improve the Ethereum Virtual Machine (EVM), a key part of the infrastructure that controls how blocks are added to the network, but they should tread carefully. The more new features are added, the more testing will be needed, which can push the release date back to months or years. Many network users don’t want to wait that long to access features that have already been under discussion for years.
Ethereum could not save crypto
The merger – an Ethereum upgrade that was done to prove the consensus of the bet – passed smoothly from a technical point of view, without critical errors. One thing that cannot be fixed on September 15th is the state of the markets. Despite all the hype, the merger was unable to beat the 10-month economic downtrend, and the outlook remains bleak for crypto assets. ETH has fallen by 20% in the past week.
“Price drops are inevitable around the time of an event as important as the consolidation, as the idea of buying rumor and selling news is a self-fulfilling prophecy at this point,” explains NewsCrypto.io CEO Vid Gradišar.
However, he remains bullish, predicting, “In the long-term, there is no doubt that the net result will be better than ETH, despite the lower price action on the time frame.”
ETHW, the original parent of the Proof of Work chain that forked out from Ethereum at the Merge, is faring worse as owners airdrop their coins collectively. The miner-controlled ETHPoW network lost most of its value in a week, despite the coin being listed on major exchanges.
“I think ETHPoW was created for the immediate cash benefits it brings to stakeholders,” says KIRA founder Milana Valmont, “Take a look at the price action since the merger; ETHW is down over 85 percent. We could see a massive exodus of miners, leaving only those who have no electricity cost because the miners’ sustainability is directly related to the associated asset price.”
Scaling is a marathon, not a sprint
The integration did not provide any recognizable improvements to the end user; Ethereum network fees and speed remain unchanged, for example. However, subsequent upgrades will remedy that, starting with Shanghai.
“The Ethereum Shanghai upgrade will be the next important update after the merger, adding a withdrawal feature for stacked ETH as miners cannot currently withdraw rewards and funds from their checking balance,” Alex Mamoulian, Blockchain Analyst at DappRadar explains. “The Shanghai upgrade, which is currently in the planning stage, will include changes to the EVM functionality on the blockchain.”
“Back in July, Vitalik Buterin said that even after the Ethereum merger, there would only be about 55 percent of it left. So, looking at more major development milestones in the Ethereum roadmap, the so-called “Surge” will be the next major update to improve scalability. Scale, speed, and network capacity by implementing hash and Layer 2 pools.
“The popularity of Ethereum has also led to its downfall due to scalability challenges attributed to the slow Proof of Work consensus,” says Victor Young, chief architect at Analog. “In this regard, the merger paves the way for future expansion upgrades on the Ethereum platform, including hashing capabilities.”
The concept of hashing, which enables the blockchain to process transactions in parallel for greater speed, has long been on the horizon for Ethereum. So far, however, most scaling improvements have been implemented on the neighboring Eth blockchains such as Polygon and Arbitrum.
“Sharing will add more scalability and efficiency to the Ethereum chain, which in turn will increase transaction speed, reduce gas fees, and make the network better equipped to handle new use cases,” explains Matthijs de Vries of AllianceBlock. From its creators moving on to other chains. Sharing can promote a sustainable future for ETH, and what’s more, bring developers back to the original EVM chain.”
As the main channel for the movement of funds in the industry, which involves billions of dollars, the sanctity of Ethereum cannot be jeopardized. Changes must be carefully planned because of the chaos a fatal mistake could cause to the world de facto Smart Contract Chain. It is hoped that the Ethereum upgrade will be presented in Shanghai within the next 12 months, although the beta development of Ethereum is taking longer than expected.
"I think the hardest part is already behind us," says Milana Valmont. “The Merge upgrade is like switching passengers between two planes on a flight, it was difficult. I think the delays before the merger were a testament to the efforts made to ensure optimal stability of the network and not stall during the merge, and the result has paid off. With that said, I expect future upgrades to arrive on time. specified".
GPU miners are heading to new pastures
As Ethereum developers grapple with the slow and somewhat torturous task of scaling the network, Ethereum miners have more pressing concerns. When the merge began a week ago, it made GPU miners obsolete on the Ethereum mainnet. With block rewards now passed on to ETH companies rather than miners, the latter have been looking to other networks to connect their expensive hardware.
Alex Mamoulian explains: “In simple terms, the transition of the consolidation from Proof of Work in Ethereum to Proof Stake means that crypto miners no longer need to secure the network, and as a result, mining operators, rather than losing significant income, have looked into reusing private mining rigs. with their GPUs on alternative blockchains to PoW, following the September 15 transition.”
The ETHPoW chain that forked at Merge is the most obvious successor, but with its token trading at 1/200th of ETH’s value, financial incentives are low. It's also unclear why anyone would want to build on ETHPoW, which could potentially turn into a low-hash ghost town with few users.
“It boils down to one thing,” says AllianceBlock CTO and founder Matthijs de Vries, “the revenue. If miners don’t experience the revenue they expected and anticipated, they are likely to move toward Ethereum Classic, Ravencoin, or other similar Proof of Work chains. However, any migration will not only provide a fraction of the mining revenue, but also likely to decline further amid higher competition.”
Crypto networks that still use Proof of Work consensus, such as Ethereum Classic and Ravencoin, have seen their hash rate skyrocket after the merger as Ethereum miners have started. However, increasing competition for block rewards means diminishing returns.
“GPU mining stopped less than 24 hours after merging,” chirp Bitfarms Ben Ganyon. “The only coins showing a profit have no capital or liquidity in the market.”
However, at least one GPU miner has found an ingenious, if unscrupulous, use of its highly tuned hardware. On September 20, cryptocurrency market maker Wintermute open One of its Ethereum wallets has been hacked and its content drained. The hacker used a vulnerability in profanity, software that is used to generate Ethereum addresses such as those that start with multiple zeros. Using an estimated 1,000 GPUs running around the clock, the attacker is believed to have managed to crack Wintermute's private key in about 50 days. return? $160 million in ETH and stablecoins.
The consolidation may be over, but life in the Ethereum ecosystem is not in danger of becoming a boring place.