fbpx
Connect with us

Ethereum

The Merge is here: Ethereum has switched to proof of stake

Published

on

The Merge is here: Ethereum has switched to proof of stake

“The Merge”, a major upgrade to the Ethereum cryptocurrency platform, was finally completed today after a six-year buildup. As of 2:43 ET this morning, Ethereum now uses proof of stake, a way to approve new transactions that promises to cut the blockchain’s energy requirements by 99.9% and usher in a new era for the second-largest cryptocurrency. 

It would be hard to overstate how much industry excitement there has been around this shift. Many hope it can both rehabilitate the reputation of crypto for skeptics and improve the efficiency of Ethereum’s enormous ecosystem of businesses and developers. Google even created a countdown clock featuring white and black bears, a nod to a meme about the event. 

Like Bitcoin, Ethereum had been approving new transactions on the blockchain with a consensus mechanism called proof of work, whereby “miners” race to solve hard math problems using huge amounts of computing power and are rewarded for their efforts in crypto. That approach consumes a lot of energy. It has also posed scaling challenges for Ethereum: network congestion drove up fees and slowed down processing rates, making the network too expensive for smaller transactions and hard to scale for larger ones. 

Proof of stake, on the other hand, requires “validators” to put up a stake—a cache of ether tokens in this case—for a chance to be chosen to approve transactions and earn a small reward. The more a validator stakes, the greater the chance of winning the reward. But all staked ether will earn interest, which turns staking into something like buying shares or bonds without the computing overhead. 

Decentralization––the idea that decision-making and control should be distributed rather than consolidated in a single authority—has always been key to Ethereum’s vision. But that ideal has been difficult to achieve with proof of work. Although the mechanism was intended to promote decentralization, in practice individuals or groups with access to significant computer power have dominated proof-of-work mining and reaped those benefits

screenshot of Google search result widget with countdown to ethereum merge and hi-fiving bears
Google search results for “Ethereum Merge” featured a countdown clock in the days leading up to the event.

By reducing the required overhead for participation and cutting fees through efficiency improvements, switching to proof of stake could help Ethereum distribute transactions across a wider and more diverse set of validators and users. But power dynamics are still a concern. The minimum amount you can stake to become a validator is 32 ether (ETH), which was worth about $51,000 as of Wednesday afternoon, although individuals can join together in a staking pool to meet the requirement. 

We won’t know right away whether the Merge—the moment when Ethereum’s main network joins with the layer that is using the new consensus mechanism—lives up to its transformative promise. Some of the scaling efficiencies that supporters are excited about won’t even arrive until after the Surge, Verge, Purge, and Splurge—other upgrades Ethereum CEO Vitalik Buterin has promised, which may continue well into 2023. In July, Buterin said he’d consider Ethereum only 55% “done” after the Merge

In the meantime, a lot could happen. The price of ether, Ethereum’s cryptocurrency, could move up or down after the initial instability of speculation, and other proof-of-stake coins like Solana and Polkadot could be affected as well. The change could also put Ethereum in more of a regulatory gray area. Some legal scholars have suggested that using proof of stake puts the cryptocurrency at greater risk of being classified as an unregistered security because the fact that validators work alongside one another to approve transactions with the expectation of reward could be viewed as a “common enterprise”; other experts doubt that the argument is strong enough for the SEC to pursue. Buterin has claimed that the Merge makes Ethereum’s network more secure, but some experts have suggested that the opposite is the case, cautioning users to watch out for “replay attacks” where scammers can record a transaction on Ethereum’s old chain and repeat it without permission on the new one. 

Because transactions on the network post-Merge should look more like other financial transactions, traditional businesses that may have shied away from crypto’s unique and energy-guzzling processes might take a second look at Ethereum—and proof-of-stake cryptocurrencies in general. If they do, the crypto industry could see a makeover in its reputation and user base. 

On the other side of the coin, startups built around miners, who have been cut out of Ethereum’s process, will likely need to pivot or refocus on Bitcoin and other proof-of-work networks. Some die-hard Ethereum 1 proponents plan to stick with proof-of-work Ethereum. One popular miner has said he’ll “hard fork” the network, splitting off the code to preserve a separate chain (as some did in 2016 to preserve a previous incarnation of Ethereum). That move isn’t likely to have a large impact on the ecosystem unless the big platforms recognize it; OpenSea, the largest marketplace for NFTs, has claimed it will only support proof-of-stake Ethereum.

Regardless of what happens next, Ethereum’s much-anticipated shift to proof of stake has injected a boost of new enthusiasm and technical possibility into an industry beaten down by constant reports of fraud and legal investigations, plummeting token prices, and public exhaustion with celebrity endorsements and hype cycles. The fact that one of the major crypto players invested time and money laying the groundwork for a less destructive and more efficient ecosystem is an enormous achievement. That signal alone may prove transformative for the Web3 industry, which is still getting steady VC investment and could find new fuel in buoyed public perception.

Rebecca Ackermann is a writer, designer, and artist based in San Francisco. She wrote about the promises of crypto and Web3 for MIT Technology Review’s Money Issue earlier this year.

Go to Source

Click to comment

Leave a Reply

Ethereum

Celsius Network Will Hold Its Final Asset Auction On This Date 

Published

on

Celsius Network Will Hold Its Final Asset Auction On This Date 
  • Celsius Network is set to hold its final asset auction on October 17, 2022 
  • FTX CEO Sam Bankman-Fried is reportedly mulling over buying Celsius Network assets next week.

A recent court filing filed by Celsius reveals that the embattled crypto lender platform will conduct its final bidding session on October 17, 2022.

Celsius Is All Set to Host Its Final Auction Event 

Celsius Network has revealed a new timeline for its final auction event. The crypto lender platform will now be conducting its final bidding session on October 17, 2022, at 4:00 PM ET, alongside an auction, if necessary, on October 20, at 10:00 Eastern time.

Per the court filing filed with the US bankruptcy court for Southern New York, a sale hearing will be held on November 11, 1:00 PM ET, before chief US bankruptcy Judge Glenn Martin via Zoom.

Celsius Network, a prominent crypto lender platform, landed itself in troubled waters in July when the firm announced its decision to halt its deposits and withdrawals on the platform, citing extreme market conditions. The platform has received heavy criticism from the entire crypto community, which further spiralled out of control when the firm announced a deficit of 2.8 billion on its balance sheet.

In addition to this, Alex Mahinsky, CEO of Celsius Network, has recently submitted his resignation to the board. Mahinsky had reportedly withdrawn $10 million in the weeks before the firm halted deposits and withdrawals on its platform.

The auction, which is scheduled to go live on October 17, is said to be attended by a large number of interested parties. The CEO of FTX crypto platform, Sam Bankman-Fried, is also reportedly interested in purchasing the remaining assets of Celsius Network.

Last week, FTX.US won the first round of the Voyager asset auction by proposing a winning bid of $1.4 billion.

Go to Source

Continue Reading

Ethereum

Money Flowing Out Of Crypto Funds Is 666M Less Than Previous Quarter Indicating Bearish Investors Are Already Out: Bloomberg

Published

on

Money Flowing Out Of Crypto Funds Is 666M Less Than Previous Quarter Indicating Bearish Investors Are Already Out: Bloomberg
  • According to data from Bloomberg, money flowing out of crypto exchange-traded funds has slowed down by 97% in Q3 compared to Q2. 
  • Investors pulled $17.6 million from crypto ETFs in Q3 in comparison to a record withdrawal of $683.4 million from the ETF in Q2.

The second quarter of 2022 saw record withdrawals from crypto exchange-traded funds with a withdrawal of $683.4 million, which affected the price of Bitcoin and other cryptocurrencies. Bitcoin’s price has seen a 60% decrease that quarter, posting a record low of $17,785 on June 17 according to data from Coingecko.

Money Flowing Out Of Crypto Funds Is 666M Less Than Previous Quarter Indicating Bearish Investors Are Already Out: Bloomberg 12

Bloomberg data reports that Q3 of 2022 saw much fewer sales, indicating that capitulation may have occurred and bearish investors are now already out of risky assets such as BTC, Ethereum, and others.

ETF Strategist at Strategas securities stated for Bloomberg:

“I wonder if the second quarter was the ‘get me out part of these funds,”

According to Sohn, the third quarter may have been where the “laggards” and investors who had been “keeping the faith mentality” are now out.

Markets have declined in recent months as central banks have increased interest rates to curb inflation.

Bitcoin Witnessed An Increase In Volume This Quarter Against GBP

Bitcoin recently witnessed increased trading volume against GBP as the fiat currencies showed weakness. Bitcoin trading volume recorded an all-time high on Sep 28, 2022, as the UK’s fiat currency was threatened.

Bitcoin has been outperforming other major currencies in the past week, with a positive increase of 6.3%. Will this outperformance continue to hold, and are investors getting “orange-pilled” on Bitcoin while losing faith in fiat currency? This is something we will continue monitoring and see how it unfolds.

Money Flowing Out Of Crypto Funds Is 666M Less Than Previous Quarter Indicating Bearish Investors Are Already Out: Bloomberg 13

Go to Source

Continue Reading

Ethereum

Indian Crypto Exchange WazirX Lays Off 40% Of Its Staff Citing The Ongoing Crypto Winter: Report 

Published

on

Indian Crypto Exchange WazirX Lays Off 40% Of Its Staff Citing The Ongoing Crypto Winter: Report 
  • Indian cryptocurrency exchange WazirX has reportedly laid off 40% of its staff, Coindesk report adds
  • In a statement shared with the crypto news outlet, the exchange cites the prolonged crypto winter as its reason for slashing its workforce by 40%. 

Per a Coindesk report, Indian cryptocurrency exchange WazirX has slashed its workforce by 40%, citing the ongoing crypto market phase. 

WazirX Cuts 40% of Its Workforce

In a statement shared with Coindesk, WazirX, one of the leading cryptocurrency exchanges in India, has decided to lay off 40% of its staff, citing extreme crypto winter conditions. The company has reportedly laid off 50–70 people, three people familiar with the matter told Coindesk.

SimpleFX

SimpleFX

The statement later adds that these employees will be paid for additional 45 days, and after that, the workers are not expected to attend the company anymore.

WazirX, which is dubbed as one of the leading cryptocurrency exchanges in India, has cited the prolonged crypto winter as its primary reason, leading the firm to slash its workforce by almost 40%.

“The crypto market has been in the grip of a bear market because of the current global economic slowdown. The Indian crypto industry has had its unique problems concerning taxes, regulations, and banking access. This has led to a dramatic fall in volumes on all Indian crypto exchanges. ” The statement reportedly added

The firm further stated that it prioritises consumer protection and its decision to lay off 40% of its staff has been taken to “weather the ongoing crypto winter phase.”

“As India’s No. 1 exchange, our priority is to be financially stable and to continue serving our customers,” the company said. To achieve this, we’ve had to reduce our staff to weather the crypto winter. This situation is similar to the trying times the industry faced in 2018. At that time, we doubled down and built our innovative P2P engine. The crypto industry operates in cycles, and the bear market is inevitably followed by a spectacular bull market. We will continue to focus on our customers’ needs and continue to build. “We are confident that we will come out stronger when the bull market arrives,” the statement later adds

With WazirX slashing its workforce by 40%, the firm has joined the growing league of cryptocurrency exchanges that have recently decided to lay off their employees to stay afloat during the ongoing crypto winter phase. Crypto exchange Coinbase had earlier cut back on its workforce, citing the prolonged crypto winter. Similarly, exchanges like Bybit, Gemini, BitPanda, BlockFi, and Robinhood have also slashed their workforce to sustain the ongoing bearish crypto market phase.

Image: WazirX/Twitter

Go to Source

Continue Reading
Home | Latest News | Cryptocurrency | Ethereum | The Merge is here: Ethereum has switched to proof of stake
a

Market

Trending