Among the unwanted effects, The Merge could lead to delays in the issuance of new tokens, while limiting the supply of new tokens. ETH available in the market, compromising mainly the platforms that are DeFi.
- Operational problems with The Merge could affect protocols DeFi a movement encouraging alternatives to traditional, centralized forms of financial services.
- Delays in the issuance of tokens and reduction in the supply of tokens. ETH can work against you
- Development team of Ethereum a decentralized open-source blockchain with smart contracts functionality. indicates that everything is going according to plan
A recently published report claims that the next planned update to the network a network refers to all nodes in the operation of a blockchain at any given moment in time. of Ethereum known asThe Merge, could have a negative effect on 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. finance services. (DeFi), which would be prone to experience operational drawbacks.
The Merge and the problems for DeFi
The new report was published by the research firm DappRadar and disseminated by the news portal CoinDesk , which states thatThe Merge and the implementation of Proof-of-Stake poS is a type of consensus algorithm that rewards validators according to the amount of crypto they have staked. (PoS) for block processing could slow down transaction times or even lead to platform a place to buy, sell and store cryptocurrency outages. DeFi, resulting in inconveniences that could affect users and threaten the currencies issued by these services, especially stablecoins.
In this regard, the analyst ofDappRadar, Pedro Herrera, indicates thatThe Merge will have a negative effect on the supply ofEther the form of payment used in the operation of the distribution application platform, Ethereum. in the market, which will be detrimental to the platforms. DeFi:
“If The Merge does not launch successfully, we will have delays in the DeFi protocols that will affect stablecoins… But from a supply dynamics perspective, this may also affect how stablecoins will be used for liquidity how easily a cryptocurrency can be bought and sold without impacting the overall market price. pools, in the DeFi space and beyond.”
Technical reports suggest that the 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. in the consensus consensus is achieved when all participants of the network agree on the order and content of the blocks in the blockchain. mechanism could reduce the speed at which new tokens are issued, especially in the months following the upgrade, leading to some problems:
“There is a risk that The Merge could create technical difficulties, such as timestamp a form of identification for when a certain transaction occurred. desynchronization between nodes or other technical issues that prevent PoS from being in sync after the update. This could force Ethereum to pause block a file containing information on transactions completed during a given time period. Blocks are the constituent parts of a blockchain. production or even stop it temporarily while its developers work on the problem.”
The supply of ETH
Another of the points made is that these operational problems mentioned above could also lead to problems in the supply of ETH, as the network will continue to burnEther at a high rate following the introduction of the EIP-1559.
According to Herrera, the burning destroying a certain number of digital coins to reduce their issue. This method is used to fight inflation and increase the value of cryptocurrency. All token burning transactions are recorded in the blockchain as a transaction. Therefore, anyone can verify that the coins were destroyed. of ETH and the slowing of transactions could affect the supply to protocols DeFi. This has already been warned by various figures in the ecosystem, including investor Raoul Pal, that this scenario will have a positive impact on the price of digital digital technologies are these electronic tools that have the ability to generate, store or even process data. currency, reinforcing the reduction of supply in the market.
Another point that Pal also noted was that since there are no 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. under PoW, they will not need to sell the product to a third party. ETH earned after supporting the network by processing blocks to cover operating costs.
Everything is going according to plan
Outside of the analyst’s remarks of DappRadar, the truth is thatThe Merge is still on its way and is expected to go into effect on September 6th, once the update is produced in Bellatrix.
The work team of Ethereum indicates that everything is going according to plan, and that the update is close refers to the closing price; similar to the same term used in stock trading. to 100% development, so they continue to work to make the change effective and that the transition does not provide any negative effects for users and projects running on the network.
- Web hosting platform Hetzner warns Ethereum miners not to use its service
- Binance to support the opposite of Resistance, it is a threshold that crypto’s price doesn’t fall below. Ethereum forked tokens post-The Merge
- The Ethereum Merge now has an official date and will start on September 6th.
Article by Angel Di Matteo / DiarioBitcoin
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