Ethereum 2.0 ‘Merge’ Imminent After Successful Test, “Will Lay To Rest” Energy Concerns

March 18, 2022   |   Tags:
Ethereum 2.0 'Merge' Imminent After Successful Test, "Will Lay To Rest" Energy Concerns

With over $30 billion dollars at stake (locked into Ethereum’s proof-of-stake chain), Kiln - an important test for Ethereum 2.0 - just finished and puts the blockchain closer than ever before to the “merge.”

“It’s hard to tell right now what it is,” Tim Beiko, an Ethereum developer, told Fortune.

But “Kiln is, we expect, the last new testnet created solely for the purpose of testing the ‘merge.’ Kiln tried to replicate what will happen [during the ‘merge’] as closely as possible.”

The highly anticipated “merge” is the mechanism that will shift Ethereum from a proof-of-work model to proof of stake.

As Fortune's Taylor Locke notes, the Kiln testnet proves the “merge” is possible, as Kiln launched under proof of work on Monday and transitioned to a Beacon Chain running proof of stake on Tuesday.

And while crypotoi broadly speaking has rallied this week, Ethereum has accelerate dramatically after Tuesday's initial tests...

The Ethereum Foundation writes

“This merge signals the culmination of six years of research and development in Ethereum and will result in a more secure network, predictable block times, and a 99.98%+ reduction in power use when it is released on mainnet later in 2022.”

However, as CoinTelegraph reports, it appears not everything went according to plan during testing. 

According to Kiln Explorer, there were several errors relating to contract creation. In a follow-up tweet, Beiko said a client was not producing blocks consistently, though “the network is stable, with >2/3rd of validators correctly finalizing.” 

Once it's executed on the mainnet, Ethereum 2.0, now rebranded the "Consensus Layer," will be alive and kicking. 

ConsenSys CEO and Ethereum co-founder Joe Lubin is still confident that the next era of Ethereum will arrive within the next few months ("by Q2 or possibly slipping into Q3" of this year). 

"The merge is happening, surprisingly, on that same timeframe," said Lubin during an interview with Decrypt.

"So my estimate stays the same. We have a team working strongly, heavily on it."

"The merge will lay to rest proof-of-work, will lay to rest Ethereum's carbon or energy footprint problem, that all goes away," Lubin said at Camp Ethereal.

"Orders of magnitude less expensive, energetically. And another exciting thing about about moving to proof-of-stake is that proof-of-work requires a lot of issuance of ether in order to incentivize these people with heavy infrastructure, to lend their resources and validate transactions on the network. And so if you have very light infrastructure, then you can issue much less ether per block that's constructed."

As a reminder, under the new mechanism, Ethereum validators, like PoW miners, are rewarded for ensuring the network is processing correct transactions. Right now, this reward pays out 5.54% in ETH to stakers, according to data pulled from Staking Rewards.   

However, if validators get caught adding fraudulent transactions to the Ethereum blockchain, they get penalized. This penalty is monetary and gets drawn from the 32 Ethereum needed to stake in the first place in order to become a validator. 

Bitcoin also uses a PoW mechanism and has caught global criticism for its enormous energy usage. There are no immediate plans to change this.

“This is a major milestone and marks Ethereum’s readiness for full proof of stake,” a Beacon Chain community consultant known as Superphiz tweeted on Monday.

“The merge will cut our energy footprint by 99.98%.”

The 'merge' comes nine years after Vitalik Buterin dreamed up Ethereum as a way to leverage the blockchain technology underlying Bitcoin for all sorts of uses beyond currency.

But, as TIME reports this week, the Russian-born Canadian has some warnings.

“Crypto itself has a lot of dystopian potential if implemented wrong,”

Buterin hopes Ethereum will become the launchpad for all sorts of sociopolitical experimentation: fairer voting systems, urban planning, universal basic income, public-works projects.

But he acknowledges that his vision for the transformative power of Ethereum is at risk of being overtaken by greed, worrying about the dangers to overeager investors, the soaring transaction fees, and the shameless displays of wealth that have come to dominate public perception of crypto. “The peril is you have these $3 million monkeys and it becomes a different kind of gambling,” he says, referring to the Bored Ape Yacht Club, an überpopular NFT collection of garish primate cartoons that has become a digital-age status symbol for millionaires including Jimmy Fallon and Paris Hilton, and which have traded for more than $1 million a pop. “There definitely are lots of people that are just buying yachts and Lambos.”

Above all, he wants the platform to be a counterweight to authoritarian governments and to upend Silicon Valley’s stranglehold over our digital lives, and with "Consensus Layer", the arguments against this are fading fast.

Tyler Durden Fri, 03/18/2022 - 18:40