Ethereum is a smart contract platform that enables developers to build tokens and decentralized applications (dapps). ETH is the native currency for the Ethereum platform and also works as the transaction fees to miners on the Ethereum network. Ethereum is the pioneer for blockchain based smart contracts.
A lot of misinformed media outlets are reporting misinformation about what is going to happen with Ethereum in the middle of the year. This article is intended to be a clear reference guide to The Merge o “The Union”,Proof of StakeETH issuance and more on Ethereum in the near future.
What is El Merge o “The Union
Merge: combine or cause to combine to form a single entity.
Join : to combine or cause to combine to form a single entity.
Since the birth of Ethereum, it is initially launched with a proof-of-work poW is a type of consensus algorithm that rewards validators according to the amount of computational power they have expended. based consensus algorithm,Proof of Work (PoW), called Ethash ethash is the algorithm utilized for the proof of work mining Ethereum and ETH-based cryptocurrencies. Vitalik’s vision has always been for Ethereum to be an energy-efficient network a network refers to all nodes in the operation of a blockchain at any given moment in time. based onProof of Stake (PoS), or Proof of Participation.
During the first few years the team worked intensively on developing a PoS consensus mechanism that would achieve a desired level of security the term securities refers to a fungible and tradable financial instrument that carries a type of monetary value. and efficiencies. They experimented with ideas such asSlasher yConsensus Gambling until eventually things settled down withCasperel gadget deFinalidad friendly.
Purpose in the context of blockchains means that a well-formed block a file containing information on transactions completed during a given time period. Blocks are the constituent parts of a blockchain. will not be reversed or revoked once it is part of the blockchain. A transaction is final, or has “finality” when it is part of a block that will not change.
It is decided to use Casper in 2017 and at that point the focus of the team has been how to transition from PoW to PoS. The solution for such a transition is the Beacon Chain or in Spanish: La Cadena Faro .
ElBeacon Chain is an independent blockchain a distributed ledger system. A sequence of blocks, or units of digital information, stored consecutively in a public database. The basis for cryptocurrencies. which uses PoS as a consensus mechanism. It runs in parallel to the Ethereum mainnet where at the time of this publication (March 22, 2022) PoW is still used as the consensus mechanism.
Keeping both chains separate allows you to work on a market-ready solution without risking the ecosystem of decentralized decentralization refers to the property of a system in which nodes or actors work in concert in a distributed fashion to achieve a common goal. applications running on Ethereum mainnet today.
As of November 2020 there is a one-way bridge between the two chains, i.e. a bridge to send ETH from Ethereum a decentralized open-source blockchain with smart contracts functionality. Mainnet an independent blockchain running its own network with its own technology and protocol. al Beacon Chain .
10,634,226 ETH (USD $30.99 billion) have been pledged into the ETH2 deposit contract.https://t.co/KnVHSB2d40
— Diario฿itcoin (@DiarioBitcoin) March 21, 2022
At the time of this publication, more than 10,600,000 ETH have been sent, equivalent to almost USD $31 billion, which have been frozen in escrow a financial instrument where assets or cash are held by a third party while a buyer and a seller complete a deal. ( Stake ) to secure the blocks of the Beacon Chain .
To carry out a 51% attack at this time on the Beacon Chain attackers need at least $15.5 billion in ETH.
These 10.6M ETH have been delegated to more than 318 thousand block validators. Currently, Ethereum mainnet builds blocks using miners’ pools.
Los últimos 50 mil bloques fueron minados for only 64 pools in the last 7 days, of which,Ethermine controls 29% of the blocks, F2Pool el 13.97%,Hiveon Pool el 10% y Flexpool.io or 5.84%.
These 4 pools control over 59% of the blocks, creating a high risk of collusion and centralization that could result in censorship, front-running of transactions on decentralized exchanges and the high transaction fees that plague Ethereum today.
The new consensus system requires a minimum of 16,384 validators, by the time of this publication there are 318,399 active validators, making Ethereum much more decentralized and secure.
If we compare 64 pools vs. 318,399 validators, we have a difference of 4 orders of magnitude, Ethereum withProof of Stake is more egalitarian and is 4,974 times more decentralized if we focus on block generation.
Since its launch in 2020, the Beacon Chain has completed 100% of the block times without the network going down.
The weather in the Beacon Chain is divided into slots y epochs . A slot lasts 12 seconds and a time lasts 6.4 minutes, a time is 32 slots . A block can be created for each lock of 12 seconds.
Now, Ethereum can’t be split into 2 chains forever, to achieve a transition toProof of Stake history in the old network must be preserved for the time when the new network takes over. This process will be done under a process called “The Merge“The PoW consensus layer will be eliminated (bye-bye GPU miners contributors to a blockchain taking part in the process of mining. They can be professional miners or organizations with large-scale operations, or hobbyists who set up mining rigs at home or in the office. on Ethereum) and all future blocks will be generated with Proof of Stake.
The Merge will have no effect on the data layer in the Ethereum network.
The Merge is NOT the release of a new version of Ethereum, there will be no such thing as “Ethereum 2”, The Merge is the release of a new version of Ethereum. will only be an upgrade to the consensus consensus is achieved when all participants of the network agree on the order and content of the blocks in the blockchain. layer bringing Ethereum in line with Vitalik’s original vision.
Debo hacer algo con mis ETH?
You don’t have to do anything, you will have the same amount of ETH after the merger, there will be no “ETH2” coin, you don’t have to migrate anything, everything will be exactly the same, only the consensus layer in the network will be updated and this will be inconsequential for you.
If you are a miner, you should plan your transition, it will be economically impossible to mine blocks, among your options you have to mine other coins that can use your GPUs, or sell your GPUs ideally to have capital capital is most commonly defined as the large sum of money you would use to invest. which you can put in stake to keep generating daily ETHs.
Si deseas participar como un validador necesitas al menos 32 ETH en stake, si tienes menos de esta cantidad puedes delegar los ETH que desees poner en participación al validador de tu preferencia.
Why this transition?
Energy Sustainability in a world where climate change change — a concept relevant to cryptocurrencies that use the UTXO model — is the number of coins sent back to a user after they use their unspent outputs to initiate a transaction. generated by fossil fuels makes PoW grids seem immoral at first, and possibly illegal as the problem becomes more evident to the world’s citizens and governments every year. The greatest global consensus challenge humanity has ever faced is how to get our greenhouse gas a term used on the Ethereum platform that refers to a unit of measuring the computational effort of conducting transactions or smart contracts, or launch DApps in the Ethereum network. It is the “fuel” of the Ethereum network. *see Gas Limit and Gas Price. emissions to zero. The more we learn about the gravity of the issue and reflect on the cryptocurrency cryptocurrencies are digital currencies that use cryptographic technologies to secure their operation. industry, PoW may eventually become illegal, but outside of the climate change debate, more efficient and secure systems, able to adapt to reality and compete, tend to prevail.
Ethereum’s energy consumption for block creation is will decrease by approximately 99.95%. once the joint is made.
In PoW miners need to be able to cover at least the cost of the hardware (GPUs) and the cost of electricity (paid to third parties in most cases, power generation companies in many countries owned by corrupt governments), this creates pressure on the ETH market an area or arena, online or offline, in which commercial dealings are conducted. as miners must periodically sell to cover the energy and upgrade costs to their equipment as it becomes obsolete.
With PoS any ETH holder can delegate capital to validators and get “yield” in proportion to how much ETH they put on deposit, this motivates Ethereum users to secure the network using ETH, creating less supply and potentially increasing the value of ETH since there would be less available on exchanges.
The transition opens the door to many scalability solutions in the future, specifically the separation of the blockchain into shards (data sharding), thin clients and more.
The transition helps reduce some of the complexity in Ethereum source code the action of coding is to write programming statements for a program. going forward by separating Ethereum’s virtual machine execution from the consensus layer.
The Union is a very smart move to adapt to reality.
When is the Merge?
Being optimistic but reserved, the developers and the community expect the merger to take place in mid-June 2022 by multiple reasons . On March 10, 2022, Marius Van Der Wijden announced the launch of a testnet an alternative blockchain used by developers for testing. called Kiln which demonstrates the successful unification process. This is expected to be the last testnet for unification. In the past we have seen that they usually launch these testnets only when they have products that are almost ready for production.
In the document EIP-4345 a so called “Difficulty Bomb” was defined for the PoW mining a process where blocks are added to a blockchain, verifying transactions. It is also the process through which new bitcoin or some altcoins are created. algorithm, this difficulty a measure of how hard it is to validate a new block on a blockchain. bomb refers to the intentional and sudden increase in the difficulty of generating Proof-of-Work blocks, it basically makes all existing miners unable to mine any more blocks and they are encouraged to upgrade their nodes to the new version with PoS consensus.
Implementation suggests that this bomb is scheduled to “go off” in mid-June.
If we are not ready with the Merge for that block, the pump may be delayed to a later date.
However, anything can happen to delay the union. To keep up to date with the possible date put WenMerge.com en tus bookmarks.
Won’t those 10 million ETH that are now blocked cause a crash when The Union happens?
In November 2020 the average price of Ethereum was above USD $396, to start making staking participation in a proof-of-stake (PoS) system to put your tokens in to serve as a validator to the blockchain and receive rewards. you needed 32 ETH, about $12k back then. You would expect that many of the people who froze their ETHs would want to sell some of those ETHs this summer at almost 10x the cost back then, coupled with the 5% annual gains gains refer to an increase in value or profit. over almost 2 years, but it’s not that simple.
The first withdrawals will probably come 6 to 8 months after the merge following the first hard fork after the merger. This means that there will be months without Proof of Work generating about 13 thousand ETH per day that will not be sold on the exchanges and while no new ETH will be generated with Proof of Stake.
Right now there are thousands of people waiting in line to put their ETH into stake. After the merger validators will start receiving transaction commission rewards which could double the 5% they expect to earn from the ETH they managed to deposit, they may prefer to leave all that capital in stake to earn compound interest.
The stakers who stay stand to gain the rewards of those who choose to leave, it will be a very interesting market dynamic to see develop.
But isn’t this printing money out of thin air if you don’t burn electricity?
There is still work on the part of the validators, they must create blocks and validate the blocks of other validators. Unlike Proof of Work where the “work” is nothing more than calculating random numbers, this is 100% useful work.
There are costs associated with staking, there are opportunity costs since you could make more money with another investment. Your money is frozen for a period until the validator a participant on a proof-of-stake (PoS) blockchain, involved in validating blocks for rewards. becomes active, then when you want to withdraw it there is another waiting period.
It is worth noting that in other Proof of Stake blockchains like Cardano, if you want to withdraw your money you can do so immediately and the profits are auto-stake, there is only a period of about 25 days after the deposit in which you do not generate profits, but your ADAs are liquid at all times. This will not be the case with Ethereum where you pay a liquidity how easily a cryptocurrency can be bought and sold without impacting the overall market price. fee.
Validators must be constantly monitored and maintained to ensure 100% uptime, software updates, and security to avoid penalties.
The more people staking the less the individual rewards will be, the price of ETH in the market will then put a value on the above costs. If the rewards for staking are too low then people will take their money out and put it somewhere else, which will make the profits for those who stay higher, if the profits are too high this will attract more people to staking creating a fascinating dynamic with more egalitarian fluctuations where everyone can participate, not just those who have access to cheap electricity and enough money to buy GPUs.
If you have more questions please leave them in the comments section and we will update this article to answer them.
This is an original article by DiarioBitcoin. All rights reserved.
Fuentes: ethereum.org, reddit.com/r/ethereum, beaconcha.in, ethmerge.com, github.com