On this week’s show, host Juliet Lima talks about Ethereum’s migration to Proof-of-Stake, initially slated for a 2020 release, but now seems to be destined for a summer 2022 release.
Tim Beiko, an Ethereum developer, tweeted that the release of Ethereum 2.0 would be coming “a few months after” June, adding that Ethereum’s Proof-of-Work days are numbered.
A crucial question for Ethereum holders will be whether the upgrade will address high transaction costs and the slow transaction speed. The primary purpose of the upgrade was to migrate the transaction validation method from proof-of-work, where “miners” secure the network by solving complex puzzles, a computationally intensive process, to proof-of-stake, where people stake coins on the blockchain in the hope of being selected to validate a transaction. The end goal is to reduce the energy consumed by the Ethereum blockchain by an estimated 99.95%. Users with staked coins will have a say in the network’s security.
What’s taking so long?
The switch from proof-of-work to proof-of-stake has taken a long time, but it is important to note that this switch is unprecedented. Hence, developers will want to make sure that they cover all bases thoroughly. A new parallel Beacon chain split from the main Ethereum network in 2020 and has been running proof-of-stake in parallel with the original Ethereum’s proof-of-work mechanism.
Last month, developer Marius Van Der Wijden announced a “shadow fork,” which is essentially a practice merge of the proof-of-work and new proof-of-stake blockchains. The shadow fork enables the community to deploy smart contracts, code that executes based on a specific set of triggers and test the blockchain infrastructure. We should see a fully proof-of-stake system deployed this summer with some luck.
Holders of ETH need not do anything after the merge, as the developers will handle all of the machinery to switch from proof-of-work to proof-of-stake. However, you can get involved in the upgrade through staking or testing the shadow fork. Stakers can cash out their rewards once the merge is complete.
Ethereum’s price may increase following the upgrade since ETH will become a deflationary currency. A percentage of transaction fees will be “burned,” reducing the number of ETH in circulation. Some speculators predict that if the demand remains the same, the price could increase to $10K.
Some developers are wary
Others are less sure of the upgrade, considering the high level of crypto expertise required to manage the migration and the risk of each expensive step. Developer Lead Péter Szilágyi has flagged some concerns as the upgrade progress on Twitter. He said, “As good as it feels that we’re approaching The Merge, I must emphasize that #Ethereum is not going in a clear direction. Tangentially, it’s achieving results, but it’s also piling complexity like there’s no tomorrow. If the protocol doesn’t get slimmer, it’s not going to make it.” He also debunked claims that the upgrade would reduce fees and transaction speed. “The merge won’t make a dent on gas prices or TPS,” he tweeted.
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