After years of waiting, the Ethereum blockchain has just successfully transitioned to “proof of stake”.
Mission accomplished for Ethereum. Around 8:30 a.m. on Thursday morning, the Ethereum blockchain successfully transitioned from “proof of work” (PoW) to “proof of stake” (PoS) dubbed The Merge. This is a “great moment for the Ethereum ecosystem,” said blockchain co-founder Vitalik Buterin.
Concretely, what happened this morning? The transition, which was to take place around 7:00 am, will have taken a little delay, the time that the last miners unplug all their devices. But around 8:30 a.m., that transition finally happened.
As expected, miners migrated to new blockchains, giving way to validators. As a reminder, since December 2020, the Ethereum blockchain has carried out internal tests to allow a smooth transition between miners and validators, starting to make the “mining” activity more difficult. It is especially during the recent Bellatrix update that the “difficulty” of mining has increased sharply for miners to make way for validators.
This Thursday, the number of validators has also increased rapidly, from around 422,000 validators to 428,000 at the time of writing this paper.
“The difficulty reached the expected point and the merger process went well. From that moment on, it is the validators who take over from the miners for the production and validation of the blocks”, explains to BFM Crypto Sébastien Leguell, founder of the specialized media Around the Block.
Reduced energy consumption by 99%
Another direct consequence, the Ethereum network reduced its energy consumption by 99% this Thursday, with the transition to “proof of stake”. It is part of the philosophy of the Ethereum blockchain to be a green blockchain, which its co-founder did not fail to recall this Thursday morning:
As a reminder, the proof of work is to put in competition tens of thousands of computers (“miners”) which work at the same time to solve a mathematical problem and thus acquire the right to add a new transaction (block ) on the blockchain. By adding a new block to the chain, these are paid in crypto. But it’s a very energy-intensive method since these computers consume a lot of electricity.
On the other side, with Proof of Stake, there are no more cryptographic puzzles to solve. To guarantee the security of the blockchain, validators (equivalent to miners in PoW) must “deposit” (in crypto language we speak in particular of “staker” hence proof of “stake”) in a common pot 32 ethers each, and it is according to a draw system that they will be chosen to validate a transaction.
The amount of ethers has dropped
Another notable consequence this Thursday due to The Merge, the amount of ether produced on the blockchain has dropped as can be seen on This site. If the ether supply has peaked at 120,521,140 before The Merge, it is at 9:45 this morning of 120,520,960, or 120.52 million.
“With the transition to merge, the quantity of reward is reduced and the fees burned thanks to the EIP 1559 make it possible to reduce the quantity of ETH in circulation during heavy use of the network”, specifies Sébastien Leguell.
If this supply is now reduced, this does not mean that ether is becoming deflationary.
“It’s going to be variable over time. Some periods will be inflationary (low network usage), others will be deflationary (high usage).”
Indeed, the creation process is the fact of recovering ethers when a validator will create and validate a block in the form of a reward. The destruction of ethers is produced through transaction fees.
On the other hand, on the user side, nothing changes as we wrote in an article on BFM Crypto, so we will have to pay attention to false updates or scams of all kinds that will circulate this Thursday.
According to data from Coinmarketcap, Ether’s price rose more than 2% within an hour, trading at over $1,600.
To comment on the news related to The Merge, BFM Business is producing a special program at 4:30 p.m. in Le Club Crypto. The show will be followed by a debate on BFM Business social networks around 5:15 p.m. with Alexandre Stachtchenko, Blockchain & Cryptos-assets Director at KPMG France, to answer technical questions about The Merge.
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The Merge: Ethereum successfully transitions to “proof of stake”
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