Based articles from Fred Wilson
In about a month, there will be a major moment in the crypto/web3 world. The Ethereum blockchain will move from a proof-of-work consensus mechanism to a proof-of-stake/stake consensus mechanism.
In Ethereum land this event is known as “The Merge” (Merger).
There are many reasons why this is an important moment for the cryptocurrency/web3 world. According to the author, the most important reasons are the following:
1️⃣The Merge significantly reduces the impact of the Ethereum blockchain. Miners will no longer have to run large, energy-intensive computer facilities to ensure the security of the Ethereum blockchain. There are many people who have serious concerns about web3 due to environmental concerns. The Merge dispels these fears. It is very important.
2️⃣The balance of supply and demand for the Ethereum token will change dramatically. In a proof-of-work system, miners spend significant amounts of money running large, energy-intensive computing facilities to ensure the security of the chain. They receive rewards in the form of tokens (in the case of Ethereum, these are Ethereum tokens) and must sell most of these tokens to pay electricity bills and equipment costs. In a proof of stake system, validators stake significant amounts of base tokens (in the case of Ethereum, these are Ethereum tokens) and risk losing them if a failed transaction is confirmed. The costs associated with staking are very small, so tokens earned from staking are primarily held rather than sold.
Opinion: Ethereum will move from a system in which structural outflows are approximately $20 million per day to a system in which structural inflows are approximately half a million dollars per day. ‼️This shift in supply/demand will likely lead to completely different dynamics for ETH/USDC, ETH/USD, and ETC/BTC (as well as other ETH pairs) in the future.
3️⃣Proof of Stake systems (of which there are already many on the market, for example, Solana, Avalanche, etc.) are considered safer because the likelihood of an attack on 51% is lower.
Ethereum is moving to a consensus mechanism that many consider more resistant to attacks, making it even more secure than it was before.
This event has several interesting side effects. 👉The current proof-of-work Ethereum blockchain will not disappear. This chain, which many call ETH POW, can develop a community around it, live and benefit developers and others. This has already happened several times in the Bitcoin community and once in the Ethereum community. ETH holders at the time of the merger will receive ETH POW tokens as a result of this merger. These ETH POW tokens may be worthless over time or worth a lot over time. There is really no way to know how ETH POW will evolve.
The Merge is probably the most important change that large-scale blockchain has ever undergone. It is not without risk, and there is a possibility that things will not go so smoothly. Ethereum developers have been working on this for years and have deployed many testnets, and they are confident that they will be able to pull it off next month. The cryptocurrency/web3 world will be watching developments closely. This is a very important moment for the sector and will be very positive if everything goes according to plan.
UPD: Ethereum 2.0
Ethereum developers answered questions and (https://ethereum.org/en/upgrades/merge/#misconceptions) dispelled myths about the transition to PoS.
💥Basic:
⚡️The commission on the ETH network will not decrease and transactions will not go faster.
⚡️Staking profitability will not increase!
⚡️Immediately after the transition, the airwaves of the stakers will not be defrosted.
⚡️Validators will not be able to simply leave staking, so as not to collapse PoS.
Author of the translation: Lyubasha @lyubasha_8
