The Merge is a plan to transition the Ethereum blockchain from proof-of-work to proof-of-stake, with a goal to slash the blockchain’s energy consumption and lay the ground for it to be more productive in the future.
The crypto industry will be closely watching Ethereum’s “Merge,” a highly anticipated upgrade that is expected to happen in September. If successful, the upgrade is anticipated to lower the blockchain’s carbon footprint, reduce ether supply and potentially have a profound impact on the whole crypto ecosystem.What is Ethereum Merge? The Merge is a plan to transition the Ethereum ETHUSD, -2.
Under proof-of-stake, blockchain transactions are validated by coin owners, who stake, or lock up their cryptocurrencies with the blockchain. As it doesn’t require much use of electricity, the mechanism has been pitched as a more environmentally-friendly alternative to proof-of-work, and currently is used by many of Ethereum’s competitors, such as Binance Chain, Solana SOLUSD, +6.01%, Cardano ADAUSD, -1.02%, Polkadot DOTUSD, -0.04% and Avalanche AVAXUSD, +2.79%.
What’s more, the Merge may pave the way for Ethereum to become more scalable, setting the foundation for the blockchain to become faster and cheaper in the future. Some also expect the price of ether to rise into the “Merge,” though the crypto has plunged 57% year-to-date, according to CoinDesk data. Analysts at research firm FSInsight expect ether’s market cap to surpass that bitcoin in the next 12 months, as ether’s new supply is reduced and as selling pressure from miners is eliminated, according to a recent note. Ether’s market cap stands at $202 billion, while that of bitcoin is about $411 billion, according to data from CoinMarketCap.
How are traders preparing? Traders have been busy positioning themselves ahead of the merge, especially after Ethereum miner Chandler Guo in late July proposed to “hard fork” the Ethereum blockchain, or splitting the chain into a duplicate version based on the proof-of-work consensus mechanism. Some miners vowed support for Guo’s proposal, since the Merge would make mining obsolete. It isn’t clear how much popularity the new chain might gain.
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