Ethereum completed its Merge phase on Thursday after activating the software upgrade at the TTD on the blockchain's proof-of-work (PoW) system.
Ethereum co-founder Vitalik Buterin announced the Merge's completion on his Twitter account, saying that the transition was a “big moment” for the ecosystem. Buterin praised everyone involved in the transition process, saying that they should feel “very proud.”
The Merge was a process of merging the PoW-based Ethereum mainnet with the Beacon Chain—a proof-of-stake (PoS) platform. Ethereum’s Merge enables the blockchain to reduce energy usage by more than 99 percent. This move places Ethereum on the list of companies compliant with the Environmental, Social, and Governance (ESG) criteria. The upgrade also increased the network’s scalability.
A number of blockchain analysts said that the Merge would aid Ethereum’s ecosystem growth as it was an established brand. It is expected that developers will be more interested in building DApps on Ethereum than smaller blockchains like Cronos.
Effects on stakeholders
Stakeholders that will be affected by the Merge include developers, experts and miners. Ethereum developers said that this process offered various benefits for DeFi project developers and end users within the ecosystem. DeFi apps (DApps) developers can create robust DApps and make their products compatible with one another. End users can also easily access and utilize DApps.
Experts in the crypto industry said that investors would reap the benefits of the Merge in the long run despite the phase not guaranteeing an immediate speed change or low transaction fee. Choise.com founder Vladimir Gorbunov explained that Ether (ETH)’s supply would decrease as the number of investors went up, causing the value of each ETH to increase.
Laguna Labs chief executive Stefan Rust explained that ETH’s outlook in the medium to long term was better after the Merge. Rust also said that ETH’s value could exceed $3,000 per unit by the end of 2022, with the possibility of its market value overtaking Bitcoin’s native token, BTC.
ETH miners might be out of a job after the Merge if the transition led to a hard fork because some miners probably opted to stay within the proof-of-work mainnet. Galois Capital reported that many developers, through Ethereum’s upgrade, would cause two blockchains to exist simultaneously—ETH1 (PoW) and ETH2 (PoS).
“There are chances of a split and the creation of two Blockchains, but we believe that it will be minimal, as we already have an Ethereum Blockchain (Ethereum Classic) on the proof-of-work consensus mechanism,” MuffinPay CEO Dileep Seinberg said.
Some developers pointed out that the Merge would not necessarily improve the network’s scalability. Halborn’s Steven Walbroehl said that Ethereum changed its consensus mechanism and not expanded its network capacity. The upgrade likely will not affect the base blockchains on the core of the network, according to Walbroehl.
The upgrade could potentially weaken Ethereum’s security. Security experts have warned that attackers could navigate between two consecutive blocks without the aid of an arbitrage bot while conducting attacks on the system. Unlike in a PoS network, the possibility of validating consecutive blocks is low in a PoW-based network, meaning that attackers are less likely to plan an attack on the system.
However, they also said that PoS had “sufficient practical security” and could be improved. Ethereum developers need to fix the consecutive blocks problem, which experts said was “hard to solve.” When the problem is fixed, Ethereum’s PoS can defend itself better against attackers in the future.