1. Ethereum ships Merge without hiccups
The Facts:
- On Thursday, Ethereum successfully transitioned to Proof-of-Stake (PoS) in a flawless fashion as the Merge block proposed in Slot 4’700’013 and finalized in epoch 146’876.
- The Merge passed without hiccups, marking the successful conclusion of a multiyear effort mitigating technical and operational risk of upgrading a +$170b network in open-source development.
- The impressive participation rate (way above the mandatory 66%) led to the quick justification of the first epoch and the network subsequently reached finality by hitting two justified consecutive epochs.
- On Thursday afternoon, a couple hours after the Merge, the mainnet of the PoW fork went live as well.
- Coming next, the Shanghai upgrade, a couple months down the road, will unlock staked ETH before the Surge, a scalability upgrade introducing sharding, will be implemented.
Why it’s important:
- The Merge of the execution and consensus layer, that was previously described as trying to hot swap airplane engines in-flight, was completed smoothly after a marathon of testing and preparation without most users even noticing thanks to an impressive, multiyear effort by developers, researchers and coordinators.
- With the transition to PoS, a 99.8% reduction in energy consumption is achieved as neither expensive mining hardware nor operational cost of miners have to be compensated any longer by protocol emissions.
- This is not only accompanied by a ~90% decrease in protocol issuance but according to Ethereum researcher Justin Drake, also leads to a 0.2% reduction of global electricity consumption, similar to Finland just shutting off their power grid.
- This will not only establish improved sustainability of the network, but it will likely also lower the entry barrier for institutional investors, who struggled with ESG related concerns about the carbon footprint.
- As the first PoS block mined faced high demand due to MEV and squeezing in transactions for historical reasons, the block reward went up as high as 45 ETH.
- Following the Merge, SEC’s Chairman Gary Gensler did not hesitate to signal that Ethereum’s new PoS mechanism might draw attention of the SEC as staking could trigger securities laws.
- Moreover, voices grew louder around staking providers, as e.g. Martin Köppelmann pointed out that 420 of the first 1’000 blocks were built by Lido and Coinbase alone followed up by discussions that Lido is based on 28 independent operators.
- Regarding the PoW fork, Tarun Chitra revealed on the Chopping Block, that EthereumPoW discussed in their Discord to retarget burned funds from EIP1559, funds within the deposit contract and funds from the Ethereum Foundation to themselves; ETHW declined significantly in price following the mainnet launch and is currently trading at $13.22
