The upgrade, known in the industry as “Merge,” which changes the way new transactions are verified on the Ethereum blockchain, was completed early Thursday, co-founder Vitalik Buterin said. Ethereum powers large areas of the Web3 world, which includes applications such as digital collectibles and decentralized finance systems. The milestone, promised by developers for years, was hailed as one of the most significant moments in crypto’s short history by fans, who planned “Merge parties” in cities around the world and watched live-streamed watch parties on social media. “This is the first step in Ethereum’s great journey towards being a very mature system. There are still steps to be taken,” Buterin told developers. The Merger marked a high-stakes test for the cryptocurrency sector after a collapse in token prices this spring wiped $2 trillion off the value of digital assets and shook faith in the market. Changing the architecture that underpins the $200 billion cryptocurrency ether, the top token on the Ethereum blockchain, and tens of billions more of related assets and applications is fraught with risks from technical hiccups to disputes between participants in the decentralized network, even after the merger is complete. the. Its supporters expect a successful merger to boost confidence in Ethereum, launched in 2015 by Russian-Canadian developer Buterin, and the many tokens and projects running on its blockchain, as well as harsh criticism of its energy consumption. However, Ethereum developers said they will have to monitor the network in the coming hours and days to ensure the upgrade works smoothly. “It’s a complex project,” said Edouard Hindi, chief investment officer at crypto hedge fund Tyr Capital. “A Forgotten Melody . . . it could lead to a lot of volatility and the market is in a panic.” The merger represents just one step in a plan devised by Ethereum developers to overcome limits on network capacity, which are seen as a major obstacle to achieving mainstream adoption of decentralized finance. “[The Merge] it solves one issue, but it doesn’t solve many other issues,” said Lars Seier Christensen, co-founder of Saxo Bank, who now runs a blockchain project called Concordium. Ethereum, like bitcoin, has so far relied on network participants solving complex mathematical problems to validate new blocks, a process called proof-of-work. Ethereum’s energy consumption was similar to that of Finland. A merger refers to when the existing Ethereum blockchain is connected to a new network where transactions are validated by a group of individuals and companies who have staked their own tokens as a guarantee of the network’s security, a system called proof-of-stake.
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Critical Intelligence in the Digital Asset Industry. Explore the FT’s coverage here. The Ethereum Foundation estimates that proof-of-work replacement will reduce the blockchain’s energy consumption by about 99.95 percent. It will also eliminate the need for Ethereum miners, companies that make money by validating new blocks through proof of work. Anticipation of the merger helped boost the price of ether, which has risen about 75 percent since its June low. Ether has gained ground against bitcoin, which has recovered just 15 percent over the same period. However, the lengthy effort to complete the upgrade highlighted the difficulty of making improvements to the Ethereum blockchain. Transactions on the network are still hampered by slow speed and high costs, which critics have said limits the system’s ability to grow. Hindi said the merger was “just one step in the right direction. There are three or four more steps. It’s a two or three year process. It’s a big, big plan underway and we’re going to have a lot of surprises along the way, good and bad.” Click here to visit the Digital Assets dashboard
