Ethereum Merge Hours Left: Here's What You Need to Know!

Ethereum Merge Hours Left: Here's What You Need to Know!

 

Ethereum Merge, Ethereum's long-awaited transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS), will occur shortly. There is a lot to consider for the broader crypto space. Here's what you need to know.

What is Ethereum Merge?

The Ethereum Blockchain will merge with the new PoS consensus layer, whose execution layer is known as the Beacon Chain. In this context, the energy-intensive consensus mechanism will move away from PoW. As you follow on Cryptoify.news, Beacon Chain went live in December 2020. Beacon Chain will allow ecosystem participants to deposit or 'stack' ETH to become new validators of the network. In doing so, it will replace PoW miners whose operations were previously to generate blocks and ensure security.

In its simplest form, Merge will make the Ethereum network use 99% less energy. It will also enable greater scalability, security and sustainability. Ethereum's main-net (PoW) and Beacon Chain (PoS) are running simultaneously and will eventually merge. Hence, the smart contract will usher in a new era for the Blockchain network. The entire transaction history of Ethereum will be migrated as the new consensus mechanism takes control of the network.

Who will protect the network after Ethereum Merge happens?

As announced, users who stake a total of 32 ETH will be eligible to become individual validators of the Ethereum Beacon Chain. Validators are assigned to generate random blocks and verify transactions and blocks generated by other validators in the network. Users can also take part in pooled or centralized staking pools by staking smaller amounts of ETH that promises a share of rewards to validate and maintain the network. For those looking to play a role in the network's new consensus mechanism, there are multiple staking options to consider.

A recent report from blockchain analytics platform Nansen shows that just over 11% of total circulating ETH is staked, 65% liquid and 35% illiquid. In addition, there are a total of 426,000 validators and approximately 80,000 depositors. In this case, a small group of assets manage a significant portion of staked ETH.

Three major cryptocurrency exchanges, Coinbase, Kraken, and Binance, hold around 30% of the ETH staked. The largest Merge staking provider, Lido DAO, accounts for the largest staked amount of ETH with a share of 31%. A fifth group of untagged validators has 23% of staked ETH.

Are forks of the Ethereum Blockchain possible?

ETH, the native currency of the Ethereum ecosystem, will remain when the main-net joins the Beacon Chain. It is worth noting that some PoW miners who have previously mined blocks and maintained the execution layer will continue to do so. The PoS powered Ethereum Blockchain will continue to use ETH after Merge. Also, another hypothetical PoW Ethereum network, called ETHPOW, could eliminate the creation of an ETHW token.

This is something considered by financial service providers who offer exchange-traded products (ETPs) linked to any blockchain underlying asset. If there is a demand to buy from a forked PoW Blockchain from investors, it is possible that some firms will consider doing so. However, ETH will continue to exist as Beacon Chain implements the PoS consensus. Any existing ETP or funds buying into ETH don't need to do anything.

Do i need to do anything?

The average Ethereum user and ETH holder need not worry about losing their funds before Merge. Also, it doesn't need to make any changes to preferred wallets. The entire history of the Ethereum Blockchain will be carried over in the transition. Also, all funds in wallets will still be accessible and safe.

Most importantly, be wary of scams. Here are three of the most obvious ways that malicious actors try to hunt down the Merge event. Fraudulent stake pools, upgrade scams and fake airdrops are being launched. You don't need to upgrade your wallet or send your ETH to get new tokens.

Source: Cointelegraph


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