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Merge Complete. Goodbye Miners, Hello Stakers

Coindesk | Sam Kessler | Sep 15, 2022

Ethereum merge - Merge Complete.  Goodbye Miners, Hello Stakers

The historic upgrade casts aside the miners who had previously driven the blockchain, with promises of massive environmental benefits.

  • How it went down:  When the Merge officially kicked in at 6:43 a.m. UTC, more than 41,000 people were tuned in on YouTube to an "Ethereum Mainnet Merge Viewing Party." They watched with bated breath as key metrics trickled in suggesting that Ethereum's core systems had remained intact. After about 15 long minutes, the Merge officially finalized, meaning it could be declared a success.
    • The massive overhaul of Ethereum known as the Merge has finally happened, moving the digital machinery at the core of the second-largest cryptocurrency to a vastly more energy-efficient system after years of development and delay.
    • It was no small feat swapping out one way of running a blockchain, known as proof-of-work, for another, called proof-of-stake.

See:  Post-Merge, PoW Die-Hards Plan to Fork Their Own Ethereum Chains

  • What about ETH price?   whose current market value near $200 billion makes it the second-largest cryptocurrency after bitcoin (BTC) – was largely flat after the Merge.
  • ETHPoW (ETHW), a hard fork of Ethereum supported by a group of proof-of-work (PoW) miners, enjoyed a massive rally leading up to Ethereum's merge event early Thursday morning. The token soared from $35.4 to $60.68 shortly after the merge, marking a run-up of more than 70% in roughly five hours, according to data from CoinMarketCap.  Since then, however, the forked token has shed the entirety of its gains, plummeting below $32 a token. Today's volatility comes as no surprise for speculators eyeing the token's price action.
  • Benefits:  The payoff is potentially gigantic. Ethereum should now consume 99.9% or so less energy. It's like Finland has suddenly shut off its power grid, according to one estimate. Ethereum’s developers say the upgrade will make the network – which houses a $60 billion ecosystem of cryptocurrency exchanges, lending companies, non-fungible token (NFT) marketplaces and other apps – more secure and scalable, too.  Ethereum network will no longer be concentrated in the hands of a few publicly traded mining syndicates
  • Stakers:  Ethereum’s new system, proof-of-stake, does away with mining entirely.  Miners are replaced by validators – people who “stake” at least 32 ETH by sending them to an address on the Ethereum network where they cannot be bought or sold.
  • Skeptics: Critics insist that old power players will just be replaced by new ones.
    • Lido, a kind of community-run validator collective, controls over 30% of the stake on Ethereum’s proof-of-stake chain. Coinbase, Kraken and Binance – three of the largest crypto exchanges – own another 30% of the network’s stake.

See:  Vitalik’s Announces Next 4 Phases of Ethereum’s Development Which is Only 40% Done

Vitalik Buterin:

The Merge is just the beginning. "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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