Ethereum Merge Anniversary: What’s Changed After the Update
Time is moving fast, and Ethereum is working hard to become even better than Bitcoin. Twelve months ago, Ethereum radically changed how it works. Some experts called it “The Ethereum Merge”, while ordinary people named it “a Transformation.” Various names, same result. Ethereum has switched its working mechanism from Proof of Work (PoW) to Proof of Stake (PoS).
You may be curious to discover how this merge has helped the Ethereum network. In this article, we will talk about this ETH upgrade and its different aspects regarding the future of the cryptocurrency (ETH) in terms of price and energy consumption. So, let’s start!
Key Changes Occurred After the Merger
In September 2022, Ethereum made a quantum leap that impressed its community. According to Ethereum merge news, switching from Proof of Work to Proof of Stake was like a rebirth for ETH. Not only that, Ethereum 1.0 officially became Ethereum 2.0, leading to some significant changes.
Reduced Energy Consumption
One of the crucial things to notice is energy drop. A year after the last Eth merge, Ethereum now relies on computers and staking-based consensus mechanisms rather than power mining, which is how Bitcoin works.
Because of this, Ethereum reduced power consumption to 99%, a major achievement. It results from smart decisions made by those responsible, especially Vitalik Buterin, the founder.
It is also worth knowing that energy used in crypto mining is not always bad. What matters is the source of power. The use of dirty or harmful energy is what we oppose. This is why Bitcoin bets on sustainable energy in its mining operations. Doing that shows that Proof of Work (PoW) is still effective even in 2024 and will continue to be so.
Ethereum Price Analysis
Most crypto enthusiasts and even the ETH merger news expected a considerable increase in the price of ETH this year. They believed that once the transition to PoS was complete and many coins burned, the price would reach $3,000 and even higher. Unfortunately, this is not an exact science, and we will explain why the price is moving at almost the same level.
One primary reason why Ethereum’s price didn’t rise after the merger is because it had to compete fiercely with Bitcoin, the king of crypto. When you compare Bitcoin’s price with Ethereum, you can see why Ethereum hasn’t performed as well. In fact, it decreased by around 25%, which explains this trend logically. Investors and traders wait to see tangible effects on the price before investing more in ETH.
That’s why some investors exchanged their ETH for BTC a few days before the Ethereum merge update. Overall, people view Bitcoin as a secure way to preserve their wealth, and they might need more time to feel the same level of trust in Ethereum.
Liquid Staking
Liquid staking is a new feature that emerged after the recent Ethereum merge. It’s a way for people to earn money using their dormant ETH holdings. With this concept, investors can earn rewards without locking away their ETH. Instead, they receive equivalent tokens like ETH, which can be used for trading while still earning rewards.
Up to this point, approximately $19.5 billion worth of Ethereum is being staked this way, and a significant part of it is done through liquid staking providers like Coinbase Prime, Lido, and Rocket Pool. It seems like they’ve monopolized the staking services.
All of this has raised concerns among crypto experts, as they have begun to notice immense control from these providers over how the Ethereum network works and who can validate transactions.
This situation has created an imbalance between contributors, leading them to propose an idea. They suggest that big providers should only control 22% of the staking to keep things fair. However, they were shocked by a refusal, which has increased doubts within the Ethereum community. So, even though liquid staking has its advantages, there are still more Ethereum merge consequences that need to be resolved to ensure safety and fairness for everyone.
New Test Network – “Holesky”
You might already know that Ethereum uses a special network called “Testnet,” where developers and programmers measure the effectiveness of the ETH blockchain by testing Ethereum’s features and smart contracts without compromising the main network “Mainnet.”
After using Goerli and Sepolia testnets for a long time, Ethereum decided to switch to a more powerful one called “The Holesky” on September 15, the ETH merge anniversary. This new testnet will be the biggest ever for Ethereum, with 1.4 million validators, which will help the real Ethereum network grow even better.
All of this is to ensure the real Ethereum network runs in good conditions and doesn’t have scalability issues with users in the future.
Conclusion
Although Ethereum has nearly a million users, one can acknowledge that the network has certain weaknesses that need fixing ASAP. For example, the unknown Ethereum supply, slow transaction speed, and monopolized liquid staking providers are reasons why traders and investors delay putting their money there, which means there is a lack of transparency. This is why Ethereum still has a long way to go until it reaches the same efficiency level as Bitcoin.
FAQ
How does Ethereum stay decentralized with nodes?
What do data providers do in the crypto market?
Why are stakers important for Ethereum?
What is the difference between Proof of work (PoW) and Proof of stake (PoS)?
