Ethereum Merged: The Dawn of New Era
This article was adapted from the “CoinTelegraph” with the original link here.
《命運樂章》Art created by 司辰
The massive overhaul of Ethereum known as the Merge has finally happened, moving the digital machinery at the core of the second-largest cryptocurrency to a vastly more energy-efficient system after years of development and delay. It was no small feat swapping out one way of running a blockchain, known as proof-of-work, for another, called proof-of-stake.
The payoff is potentially gigantic. Ethereum should now consume 99.9% or so less energy. It's like Finland has suddenly shut off its power grid, according to one estimate.
Ethereum’s developers say the upgrade will make the network – which houses a $60 billion ecosystem of cryptocurrency exchanges, lending companies, non-fungible token (NFT) marketplaces and other apps – more secure and scalable, too.
When the Merge officially kicked in at 6:43 a.m. UTC, more than 41,000 people were tuned in on YouTube to an "Ethereum Mainnet Merge Viewing Party." After about 15 long minutes, the Merge officially declared a success. The update, which ends the network’s reliance on the energy-intensive process of cryptocurrency mining, has been closely watched by crypto investors, enthusiasts and skeptics for the impact it is expected to have on the wider blockchain industry. The idea was there from the start that Ethereum would eventually make the switch to proof-of-stake.
The update’s complexity was compounded by the fact that it may have been one of the largest open-source software endeavors in history, requiring coordination across dozens of teams and scores of individual researchers, developers and volunteers.
Tim Beiko, an Ethereum Foundation developer who played a key role in coordinating the update, said to CoinDesk, “I think the Merge can genuinely get those people who were interested in Ethereum, but skeptical of the environmental impacts, to come and experiment with it.”
In 2008, Bitcoin introduced the world to the idea of a decentralized ledger – a single, immutable record of transactions that computers around the world could view, alter and trust without the need for intermediaries.
Ethereum, introduced in 2015, expanded upon the core concepts of Bitcoin with smart contracts – or computer programs that effectively use the blockchain as a global supercomputer, recording data onto its network. That innovation was the essential ingredient behind decentralized finance (DeFi) and NFTs – the main catalysts of the most recent crypto boom.
The Merge retires Ethereum’s proof-of-work system, where crypto miners compete to write transactions to its ledger – and earn rewards for doing so – by solving cryptographic puzzles. Most crypto mining today happens in “farms,” as factories of computers, with each computer strains to pump out cryptocurrency. This system, which was pioneered by Bitcoin, is what caused Ethereum to guzzle so much energy and is responsible for fueling the blockchain sector’s reputation as an environmental menace.
Ethereum’s new system, proof-of-stake, does away with mining entirely.
Miners are replaced by validators – people who “stake” at least 32 ETH by sending them to an address on the Ethereum network where they cannot be bought or sold.
These staked ETH tokens act like lottery tickets: The more ETH a validator stakes, the more likely one of its tickets will be drawn, granting it the ability to write a “block” of transactions to Ethereum's digital ledger.
Ethereum introduced a proof-of-stake network in 2020 called the Beacon Chain, but until the Merge it was just a staging area for validators to get set up for the switch. Ethereum’s transition to proof-of-stake involved merging the Beacon Chain with Ethereum’s main network.
“Proof-of-stake is like running an app on your MacBook,” Tim Beiko said. “It's like running Slack. It's like running Google Chrome or running Netflix. Obviously, your MacBook plugs into the wall and uses electricity to run. But no one thinks about the environmental impact of running Slack, right?”
Rather than a single piece of open-source software, the Ethereum network is better understood as a nation-state – a kind of living organism that comes together when a bunch of computers talk to one another in the same language, all following an identical set of rules.
Ethereum’s new system introduces a new set of incentives for the people operating these computers to follow the rules as written, thereby securing the ledger from any unwanted tampering.
“Proof-of-work is a mechanism by which you take physical resources and you convert them into security for the network. If you want your network to be more secure, you need more of those physical resources,” Beiko explained. “On proof-of-stake, what we do is we use financial resources to convert to security.”
Although Ethereum had thousands of individual miners operating and securing its proof-of-work network, computers from just three mining pools dominated a majority of the network’s hashrate, a measure of the collective computing power of all miners.
If a few of Ethereum’s big mining firms colluded to amass a majority of the network’s hashrate, they would have been able to execute a so-called 51% attack, making it difficult or impossible for anyone else to update the ledger.
In proof-of-stake, the amount of ETH one stakes – not the amount of energy one expends – dictates control over the network. Proof-of-stake boosters say this makes attacks more expensive and self-defeating: attackers can have their staked ETH slashed, or reduced, as punishment for trying to harm the network.
Not everyone buys into the proof-of-stake hype. There are no signs that Bitcoin, for instance, will ever abandon proof-of-work – which proponents insist remains the more battle-tested and secure system.
And although control of the Ethereum network will no longer be concentrated in the hands of a few publicly traded mining syndicates, critics insist that old power players will just be replaced by new ones. Lido, a kind of community-run validator collective, controls over 30% of the stake on Ethereum’s proof-of-stake chain. Coinbase, Kraken and Binance – three of the largest crypto exchanges – own another 30% of the network’s stake.
"This is the first step in Ethereum's big journey towards being a very mature system, but there are still steps left to go," said Vitalik Buterin, Ethereum's co-creator, as he reflected on the Merge during Thursday's viewing party. He went on to mention Ethereum's relatively high fees and slow speeds, which were not addressed by the update, but remain as much a barrier to growing the network's user base as environmental concerns ever were.
Buterin, Ethereum's most visible figurehead, previously outlined a set of next steps for the network that includes “sharding” – a method that should help address the network’s sluggish transaction times and high fees by spreading transactions across “shards,” like adding lanes to a highway.
That upgrade was initially slated to accompany the transition to proof-of-stake, but it was deprioritized given the success that third-party solutions – called rollups – have had in solving some of the same issues. Rollups foreshadow the likely future for Ethereum development, where community solutions – rather than updates to Ethereum’s core code – play the primary role in expanding the chain’s capabilities.
For Buterin, the Merge is just the beginning. "To me, the Merge just symbolizes the difference between early stage Ethereum, and the Ethereum we've always wanted ... to become," he said on Thursday's live stream. "So let's go build out all of the other parts of this ecosystem and turn Ethereum into what we want it to be."