Ethereum Finishes Long-Awaited ‘Merge’ Upgrade That Saves Energy

The biggest ambitious software upgrade in the history of the cryptocurrency industry has now been completed by Ethereum, opening the door for modifications that may encourage increased use of the commercial blockchain. Vitalik Buterin, the co-founder of Ethereum, tweeted that the upgrade, known as the Merge, was finished in the wee hours of Thursday.

After the transition, the network’s native token, Ether, which was stored in specialized wallets known as “staking wallets,” was used to order transactions instead of power-hungry computers. As a result, it is predicted that Ethereum will use 99 percent less energy. Such a revolution has never been attempted in the history of cryptocurrency, much less on Ethereum, which is home to 3,500 active decentralized apps, from exchanges to games, that collectively handle billions of dollars worth of cryptocurrency. The Merge, which has been in the works for years, doesn’t alter how Ethereum operates for end users. Still, it is a crucial first step toward additional enhancements that will make the network quicker and less expensive and should further boost its reputation and adoption.

“This is the first step in Ethereum’s big journey toward being a very mature system,” Buterin said during an online Merge viewing party, which was effectively a public video conference where developers tracked live progress on the switch. “And there’s steps left to go. We still have to scale, we have to fix privacy. To me the Merge symbolizes the difference between an early stage Ethereum and the Ethereum we’ve always wanted.”

Developers working on the project for months began applauding one another on the call as it became evident that the changeover had been successful. The viewing party, which peaked at over 41,000 viewers, had everything from technical explanations of what the Merge would involve to a song performance with a Merge theme. Lyrics included: “Carbon footprint is all gone. That’s why we are singing the Merge song.” According to Harsh Rajat, co-founder of the Ethereum Push Notification Service, or EPNS, doing significant software upgrades without downtime is a remarkable engineering achievement. “Akin to changing the foundation of a skyscraper while it still remains standing!” he added.

The Merge also altered Ether’s characteristics, making it more similar to yield-bearing securities. After the Merge, the staking rewards tracker predicts that Staked Ether will yield a return of roughly 5.2%. That should increase the coin’s appeal to investors, especially given the anticipated net fall in the amount of Ether tokens immediately after the upgrade. After rising fivefold in 2021, the price of the Ether token has fallen by more than 50% so far this year. Over the last month, its performance has become more closely correlated with that of Bitcoin, the biggest cryptocurrency in the world.

The software upgrade is known as the Merge because it will join the current Ethereum blockchain with a parallel network that has been operating for over two years to test the proof-of-stake idea. The renovation has generally been under discussion for more than seven years. Based on what transpired following some previous updates to the Ethereum software, the Merge may be followed by days or even weeks of difficulties even after it has been finished. Around the time of the software upgrade, cryptocurrency exchanges like Coinbase Global Inc. paused withdrawals and deposits connected to Ethereum out of concern for vulnerabilities and hackers. Aave, a cryptocurrency lender, suspended Ether borrowing before the Merge.

The potential emergence of Ethereum replicas that continue to use power-hungry machines known as miners raises further concerns. These forks, like EthereumPOW, produce unique versions of the Ether currencies distributed to all holders of mainstream Ether. The tokens could be worth anything. However, the presence of many Ether versions, each of which runs on a separate chain, might confuse and give rise to fraud and cyberattacks. Copies of other tokens operating on branched chains are also possible.

Most apps are expected to be broken since significant companies, like USDC stablecoin issuer Circle and oracle provider Chainlink, have declared they won’t support the split versions, even if all current Ethereum apps and wallets have been copied on the forked chains. It remains to be seen if the forked chains can endure over time.

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