Posted on

7 changes happening to Ethereum following The Merge

Ethereum 2.0: new features after The Merge explained in 7 points

The Ethereum 2.0 update has been successfully activated! Find out what’s new after The Merge in 7 points

The Merge was a major achievement in the field of computing. The update went live on Thursday, the 15th of September 2022 without any hiccups. The Ethereum blockchain started validating transactions through the Proof-of-Stake consensus algorithm smoothly starting from block number 15537393. As is usually the case with big events, the general euphoria passes and many questions begin to circulate about the aftermath. Will Ethereum become more centralised? What happened to the price of Ethereum? If you want to know more, read the news after The Merge explained in 7 points!

1.   Why did the price of Ethereum plummet after The Merge?

On the day of the activation of The Merge, ETH lost about 10 percentage points by drawing a red candle on the chart. But why did Ethereum collapse after the success of The Merge? Two main reasons can be identified, one is closely linked to The Merge and the other is inherent to the macro-economic situation we find ourselves in at the moment. In the current economic context, we are witnessing a raise of interest rates by the FED (the US central bank), and an increase of supply in the markets. This is certainly to the detriment of assets considered risky, such as cryptocurrencies. The price of Ether therefore fell by more than 20% after The Merge.

The second reason is precisely due to the activation of The Merge. Miners, who in the previous version of Ethereum Proof-of-Work were in charge of validating transactions, reportedly sold around 20,000 ETH in the hours following The Merge (according to OKlink‘s data). This helped to drive Ethereum’s price down.

2.   Is Ethereum more centralised after The Merge?

Someone pointed out that after The Merge, Ethereum would be more centralised than before. This is because there are currently fewer nodes involved in validating transactions on the Proof-of-Stake blockchain than on the Proof-of-Work network.

In a blockchain that works via the Proof-of-Stake consensus algorithm, transactions are validated by staking. The validator nodes of the Ethereum network, i.e. those with at least 32 ETH, are responsible for approving all transactions and are rewarded by the network through Ether rewards. Most of these nodes are organisations called staking pools that pool users’ Ether who want to delegate their crypto to participate in the consensus mechanism.

Criticism regarding centralisation has been raised because these staking pools are few in number and hold large amounts of Ether on behalf of users. One of the risks of this situation could be the centralisation of decisions and processes in the Ethereum network. However, this criticism contrasts with the idea that providers would earn money in relation to the amount of Ether they possess and consequently the number of users who choose to use them. According to this hypothesis, they would have no incentive to censor transactions and thus risk losing users and revenue. What will be the next developments? Will other staking pools arise that will help to further decentralise the Ethereum network?

The second point that Ether’s detractors try to leverage is the geographical location of the validator nodes. In response to this, a report available on the official website of Lido, one of the most widely used staking pools, shows that Lido’s validator nodes are geographically distributed. No country has more than 15% of the total in terms of the presence of validators on its territory. Not only that: Lido itself is an organisation whose goal is to improve its decentralisation and whose staking protocols are already regulated by a DAO.

3.   Beware of fake news post The Merge

On Thursday,  the 15th of September 2022, some major Italian newspapers reported the news that the founder of Ethereum, Vitalik Buterin, had hacked the Twitter profile of the Ministry for Ecological Transition, led by minister Roberto Cingolani. Obviously, none of this happened; Vitalik Buterin’s name that appeared as a profile handle was inserted by a fraudster. The Italian Web3 community was obviously very critical of the famous newspapers that raised the alarm. A series of very funny memes were born, which emphasised the misinformation and the tendency to instrumentalise information without verifying it.

4.   How do Ethereum’s tokenomics change after The Merge?

One of the 7 innovations after The Merge concerns Ethereum’s tokenomics. Tokenomics is the model that describes the economic characteristics of a token and contains all information related to the issuance and distribution of a blockchain token. The switch from the Proof-of-Work consensus algorithm to the Proof-of-Stake algorithm will result in lower ETH issuance, which will also affect the crypto’s inflation. In the period before The Merge, inflation was around 4%. Immediately following The Merge, Ether had a deflationary trend, in other words, more Ether were destroyed than issued.

Ethereum’s tokenomics will also undergo changes after the next scheduled update for Ethereum, called Shanghai. In the months following The Merge, until the activation of Shanghai, it will not be possible for stakers to withdraw their ETH. The update will regulate ETH withdrawals from staking, affecting the amount of cryptocurrency circulating.

5.   Has The Merge turned Ethereum into a zero-impact blockchain?

The Ethereum team hopes so. According to the Ethereum Foundation, thanks to the consensus algorithm change, the network will reduce energy consumption by 99.5 per cent. In Proof-of-Stake blockchains, transactions are validated through staking and not thanks to the computational power provided by the miners. It has been estimated that due to The Merge, worldwide energy consumption will be reduced by 0.2%. The Merge update could therefore change the entire industry’s narrative regarding potential climate damage.

6.   Next steps after The Merge for a more scalable network?

Now that The Merge has been activated, what is the next step for Ethereum? Vitalik Buterin spoke about this at a conference on the 21st of July 2021. The main goal is the scalability of the network, as it has been since 2017 when the use of the network increased exponentially. Today, Ethereum’s network is able to process around 20 transactions per second. In the future, with the use of some scalability solutions, it will be possible to reach even 100,000 transactions per second. The next upgrade to The Merge will be The Surge. Two phases will coexist within The Surge, the first is called proto-Danksharding and should take place within a year. With this update, which will serve to increase the amount of data that can be stored on each block, it will be possible to make transactions on Ethereum Layer 2s even cheaper. The second phase of The Surge will be called Danksharding and will aim to scale the Ethereum network also on Layer 2s through the use of so-called rollups. Rollups deal with aggregating multiple ‘off-chain’ transactions that are then ‘presented’ to the Ethereum blockchain as unique transactions.

7.   Where will Ethereum miners go?

The last point of news after The Merge concerns the fate of ETH miners. They had to equip themselves to find new blockchains where they could move all their computational power. By analysing the hash power, and thus the computational power of some alternative blockchains to Ethereum, it became clear where the miners left without employment were headed. For instance, Ethereum Classic‘s hash power skyrocketed by 500% and Ravencoin’s by 800%. Are these the cryptos favoured by miners? Those who have not moved to these alternative coins are probably thinking about other options, such as offering their computing power to cloud computing or data processing players like Amazon Web Service or validating the Proof-of-Stake version of the network by creating nodes. Other former Ethereum miners decided to create hard forks to continue their activities. There have been two hard forks since The Merge: ETHW (Ethereum Proof-of-Work) and ETF (Ethereum Fair). The two hard forks have not been recognised by Ethereum and are therefore unrelated projects to the blockchain created by Vitalik Buterin. An interesting fact about the Ethereum Fair hard fork is that it was distributed to those who owned Dogecoin, Ethereum Classic and Bitcoin but not to those who owned ETHs. Both hard forks were subject to great volatility in the hours immediately following The Merge.

Posted on

The Merge is live! The first hours of Ethereum 2.0 and the crypto community’s reactions

The Merge is live! Ethereum 2.0's first moments and reactions

The Merge was activated on the 15th of September 2022. What happened during the first hours of Ethereum 2.0? How did the crypto sector react?

The activation of The Merge update has been called a ‘milestone’, a ‘historic moment‘ and a ‘revolution’. In recent months, The Merge has been narrated in a few different ways. It has been interpreted as the engine change of a running car, or as a spaceship not yet ready for interstellar travel according to the Ethereum Foundation’s comparison. Any narrative has tried to do justice to the scale of this update, one of the largest open-source software projects in history, which required the coordination of dozens of teams, researchers, developers and volunteers.

Some people on the night of 14th – 15th of September followed the crucial moments of The Merge minute by minute as if they were watching the launch of a space mission. As the TTD approached, watch parties and streams began to follow the precise moment the Merge was completed. Everyone gathered together from all over the world. Those who watched the Ethereum Foundation’s live broadcast also received a celebratory POAP, an NFT that will forever prove attendance at the pivotal event of the blockchain conceived by Vitalik Buterin. Check out the first hours of Ethereum 2.0 and the crypto community’s reactions to the activation of The Merge!

Ethereum is now Proof-of-Stake!

With Proof-of-Stake, Ethereum is now ready for interstellar travel. On Thursday the 15th of September at 06:42:42 UTC, the Total Terminal Difficulty 58750000000000000 was reached and the Beacon Chain was finally integrated with Ethereum’s mainnet. Vitalik Buterin, the founder of Ethereum, commented on the activation of The Merge with this statement: “And we have finalised! Happy merge everyone, this is a great moment for the Ethereum ecosystem. Everyone who helped make the merge happen should feel really proud today.”

The first epoch, i.e. the first packet of 32 blocks, of Ethereum 2.0 was finalised at 06:59. This was the litmus test that kept everyone in suspense. The finalisation of the first epoch confirmed that Ethereum 2.0 was working properly. The last block of Ethereum Proof-of-Work, number 15537393, was mined by the F2Pool mining pool, one of the first pools to deal with Bitcoin mining. The gas paid by the pool for the transaction was 29,991,429 gwei, which is the smallest unit of Ether (1 ETH consists of one billion gwei). The miner of the last PoW block included a message in Mandarin in the block itself: “七彩神仙鱼F!”, which translates to “Colourful Angelfish F!”. From then on, the miners were no longer responsible for the validation of Ethereum transactions. An NFT was created from ethereum’s last mined block and created for sale on OpenSea under the name ‘The Last POW Block’.

Celebrations for The Merge and the first NFT on Ethereum PoS

A few hours after the activation of The Merge, someone paid 36 ETH (the equivalent of $57,600) to ‘mine’ the first NFT on Ethereum 2.0. The non-fungible token represents a panda and some details of the state of the blockchain at the time it was created.

Why a panda? The animal became the symbol of The Merge because it was pictured as a combination of a white bear and a black bear. A few days ago, Sam Padilla, Google’s Web3 engineer, introduced a small easter egg in the search engine screens. When a user would search for ‘The Merge Ethereum’ or similar terms, the countdown for the update appeared alongside two little bears, one white and one black. As the countdown elapsed, they moved ever closer to each other. The timer was directly connected to the blockchain and updated in real time. From now on after the successful completion of the merge, a panda appears clutching the ETH symbol between its paws.

Beeple, the famous NFT artist, also paid homage to The Merge by posting his latest work depicting a giant Ethereum symbol on Twitter.

The crypto community’s reactions to The Merge

The crypto community exploded in comments and celebrations after the activation of The Merge. Here are some of them!

1. Yuga Labs

Yuga Labs, the founders of Bored Ape Yacht Club, the leading NFT collection built on Ethereum, wrote: “Congratulations to the entire Ethereum team on a successful merge. This is a historic moment for us and a big step in scaling Ethereum to its first billion users.” For Yuga Labs, it is crucial that Ethereum becomes a blockchain capable of handling a large volume of transactions simultaneously. Especially now that it is building Otherside, its Metaverse.

2. Tim Beiko, the spokesman for the developers of The Merge

‘We are done. It’s done. We merged. Holy s**t. Amazing work everyone!” was how Tim Beiko, one of the developers most involved in The Merge, commented on the success of the update.

3.    Justin Sun, Charles Hoskinson, Emin Gun Sirer

Congratulations on the successful upgrade of Ethereum also came from competitors. Among them, congratulations came from the founders of Tron, Avalanche and Cardano.

         Charles Hoskinson, who was part of the core founders of Ethereum, recorded a video in which he explained that he wanted to take a moment to praise the hard work of the people who brought about this ‘historic moment’. According to Hoskinson, The Merge is the most complex thing ever achieved in the crypto sector. An example of scientific progress and a victory for all!

On the same wavelength, Emin Gün Sirer of Avalanche wrote that the Merge was: ‘a moment and a milestone to remember. Congratulations to the developers who navigated enormous technical complexity. You should be incredibly proud’.

What happened to the price of ETH after The Merge

In the minutes immediately following the activation of the update, the value of the cryptocurrency dropped slightly (by 0.4 per cent compared to the previous 24 hours). However, the price of ETH after The Merge remained essentially unchanged, hovering around $1,600.

Posted on

5 interesting facts about The Merge, the update that will change crypto forever

The Merge: 5 things you didn't know about the Ethereum update

The update that will change Ethereum and crypto forever is coming. Find out 5 things you didn’t know about The Merge!

‘The Merge’ refers to the set of updates that will lead the Ethereum blockchain to change its consensus mechanism from Proof-of-Work to Proof-of-Stake. In the crypto world, this has been the talk of the town for months. The Ethereum update is so important that ‘The Merge’ has become a commonly used term to indicate the final activation of the update and more generally the passage to the 2.0 version of Ethereum.

So, what will change with Ethereum 2.0? Transactions will be faster, cheaper and more green. The network will be more decentralised and secure, which will make the Ethereum blockchain more scalable and energy efficient. However, The Merge will not only impact Vitalik Buterin‘s blockchain, the upgrade will also change the crypto world forever. Ethereum is the blockchain on which the main Decentralised Finance protocols are built and in which the world of NFTs is developed. To learn more about the more technical aspects of The Merge, we refer you to Academy’s article on Ethereum 2.0. However, read on to discover 5 things you didn’t know about The Merge!

1.   Why is the Ethereum update called The Merge?

This Ethereum update is called ‘The Merge’ because it consists of the merging of two chains into one. With the update, Ethereum’s Beacon Chain and mainnet will be merged together. The former is the Proof-of-Stake network that has been active since 2020 and used as a ‘Consensus’ layer, but not yet for processing transactions. The mainnet, on the other hand, is the only ‘Execution’ layer of the blockchain on which miners will work until The Merge. With the completion of the upgrade, these two chains will be merged together to improve the performance of Ethereum.

2.   Why is the release date of The Merge changing?

The final phase and activation of the update was planned for September 2022. For a long time no official date for the release of The Merge was communicated. In the past months, the date has been postponed more than once. Even when September was identified as a possible date, the Ethereum developers only hinted at a broad activation period, namely between the 10th and the 20th of September. On the 6th September, Vitalik Buterin narrowed it down to between the 13th and 15th of the month. But why is the exact release date of The Merge not known? Ethereum’s developers did not schedule the update based on the calendar, and thus on a time parameter, but by referring to the Total Terminal Difficulty (TTD). The TTD is the value reached at which the Proof-of-Stake update will be released. It can be understood as similar to the score obtained in order to pass a level in a video game. The Merge will only be completed when the TTD of the value 58750000000000000 is reached. The TTD is the parameter that indicates the level of difficulty that miners have to face to validate the last block in Ethereum’s Proof-of-Work. This value depends on many factors and it is therefore not possible to establish with certainty when the network will reach that value. This is why the date of The Merge is constantly changing.

3.   Beyond Buterin, here is the team of The Merge

Among the thousands of programmers who keep the Ethereum protocol going, you may not know that 119 experts are working on The Merge. Together with this group, some prominent personalities from the crypto world have also joined. From the Ethereum Foundation, researchers Danny Ryan and Justin Drake have contributed directly to The Merge project. The former has been working on The Merge since 2017 (fun fact: The Merge and the move to PoS had already been suggested in 2015, shortly after the birth of Ethereum), in relation to issues such as scalability, sustainability and security. Drake, on the other hand, had a coordination and public relations role.

Vitalik Buterin, of course, also contributed to The Merge update as the mastermind behind the new understanding of Ethereum and as a populariser with the general public. We can credit Buterin for the design philosophy of the new consensus mechanism. Another key figure is Tim Beiko who heads the team of developers. Beiko became the main spokesperson on social media for the development team and managed the many steps necessary for The Merge. Among all the people working on The Merge, we should also mention Mikhail Kalinin of ConsenSys, a software development company that collaborates with Ethereum. They established the details of the Beacon Chain and, according to Beiko, Kalinin is one of those who ‘literally built and steered the ship’. Kalinin called his experience at Ethereum ‘an example of true diversification and decentralisation of work on a research and development project’.

4.   Will there be a new Ethereum 2.0 coin?

As the completion of The Merge approaches, many have wondered whether Ethereum 2.0, the new version of the Proof-of-Stake blockchain, will have a new coin. And again, what will happen to the existing ETHs in our wallets? To answer this question, you have to consider the two possible scenarios following the activation of the update. After The Merge there could be a hard fork of the blockchain in which Ethereum would split into two different chains, one with the consensus mechanism it has always had (PoW) and another that relies instead on staking to validate transactions. In this case, a new coin would be created accordingly, which is currently referred to as ‘ETHPOW’. The chain with the PoS consensus mechanism will retain Ether (ETH) as its native coin, and the PoW chain will instead continue mining ETHPOW. The PoW chain will only remain in existence as long as miners continue to use and support it.

Should a new cryptocurrency actually be created, it will be distributed via airdrop in a 1:1 ratio. Basically your ETH holdings will not change because of this. To prepare for The Merge on Young Platform, read the dedicated announcement.

5.   Sustainable NFTs in the spotlight

Among the 5 things you might not know about The Merge is the green revolution in the NFT world. Let’s consider that most non-fungible tokens are built on Ethereum. Following The Merge, there will be a drastic reduction in the environmental impact of NFT production and transactions. This is because the consensus mechanism that enables Ethereum activity will no longer rely on the computing power of the miners but on the mechanism of staking. In other words, all the electricity used to power the mining hardware will no longer be needed. All blockchain-related activities will be more energy sustainable. 

One of the main criticisms levelled at NFTs concerns the energy required for their ‘minting’, i.e. the process by which digital assets are created. Concerns about the pollution produced by non-fungible tokens have intensified, especially in the current context of an environmental and energy crisis. With greener NFTs, the sector could attract new enthusiasts and experience a creative rally. Creators and new projects will be able to indulge in creating art on the blockchain, no longer intimidated by the environmental footprint.

 

Posted on

Happy birthday to Tezos: 10 updates in 4 years!

Tezos (XTZ): NFTs and the new Jakarta update

Tezos celebrates its 4th birthday with a new update. Discover Jakarta and its scalability solutions!

On the 30th of June 2022, Tezos turned 4 years old! This date in fact coincides with the launch of the Genesis Block of the Breitman blockchain in 2018. In 4 years, Tezos has implemented no less than 10 updates in its network. The latest one is called Jakarta and went live on the 28th of June, following Ithaca in April 2022. Check out Jakarta and its scaling solutions to expand Tezos’ NFT ecosystem!

With the new Tezos update comes optimistic roll-ups

One of the reasons to be a fan of Tezos is that it is a blockchain that is constantly being updated. Tezos’ policy is to offer updates on a regular basis to provide the most functional and innovative technologies. The new Jakarta update continues Ithaca’s focus on optimising transaction finalisation. Jakarta was proposed on 16 April and went live on 28 June. The most notable feature of the new Tezos update is the inclusion of Transaction Optimistic Rollups (TORU) that will improve performance in terms of TPS (transactions per second). These rollups will be piloted for one year, and their final stay will depend on usage and feedback from the community.

How do optimistic roll-ups work?

Roll-ups are a Layer 2 scalability solution that allows a series of transactions to be merged off-chain into a single block that is recorded on Layer 1. Optimistic roll-ups are specific roll-ups in which transactions collected together are not verified once they are transferred to the main chain because they are assumed to be valid: “they are called optimistic because they work on the assumption that the validation is correct until explicitly proven otherwise.” The validity of transactions is verified as needed and security is guaranteed by a ‘Fraud Proof’ mechanism. Optimistic Rollups are used by Arbitrium and Optimism, two of Ethereum’s scalability solutions. 

Tezos’ scalability strategy? Everything for NFT!

Tezos‘s latest updates, such as Jakarta, are part of this blockchain’s scalability plan. With the new consensus mechanism (Tenderbake) Tezos has already improved the speed at which transactions are included and transcribed in the chain. But what is all this scalability for? To accommodate the adoption of projects and realities in the Tezos network, especially for those with a non-fungible and collectible token theme. For Tezos, NFTs have always been a focus, the scalability of the blockchain supports the ever-increasing number of transactions that are required to mine and sell NFTs. Scalability promotes mass adoption of Tezos as a network for NFTs!

Although they are not among the market leaders, the NFT marketplaces on Tezos have achieved significant results. Objkt for instance achieved a volume of over 100 million dollars. Not bad for a ‘secondary’ marketplace. Objkt is characterised by its green vocation, in fact it characterises its products with the hashtag #cleanNFT.