The transition of the Ethereum Blockchain from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) is imminent. This transition is called “Merge” An Ethereum Foundation member recently said that the transition will take place temporarily in mid-September. Meanwhile, Bank of America featured the leading altcoin Ethereum Merge in a research report. Here are the details…
Bank of America draws attention to Merge update for Ethereum
According to the report, Merge, the first of five planned updates to Blockchain, will combine Ethereum’s existing execution layer with a PoS consensus layer, the Beacon Chain. The bank refers to the system’s ETH token. Bank of America says that with PoS, Ethereum’s energy consumption will decrease by over 99 percent. It also lowers the barriers for investors to earn returns as network validators. Finally, Bank of America points out that Merge has changed the supply/demand dynamics of ETH.
In the note, it was stated that the transition also serves as a precursor to the second of the planned upgrades, “Surge”. This “float” process lowers transaction fees. It will also aim to increase Ethereum’s throughput from around 15 transactions per second (TPS) to around 100,000 TPS. The bank said that without scalability improvements, Ethereum will not remain dominant.
These altcoin networks take market share from Ethereum
Bank of America; He states that the likes of Binance Smart Chain (BSC), Tron (TRX), Avalanche (AVAX), and Solana (SOL) are taking shares of ETH. These newer Blockchains; is taking market share from ETH due to greater scalability and lower transaction fees. The bank added that these features will be “important as the Web 3 ecosystem of decentralized applications emerges.” Web3 represents the next generation internet focused on shifting power from big tech companies to individual users.
So, the competition between Ethereum and projects created to improve its technology continues to grow. Still, by the time Merge happens, the “Ethereum killers” are gaining momentum. In essence, the purpose of Merge is to speed up the transition from PoW to PoS. To speed up the transition, developers are trying to reduce features that will cause lag. They are also trying to temporarily block the ability to withdraw staked ETH after Merge is complete. However, these will likely be addressed in a post-Merge update.
According to many, Merge may not be able to solve problems with scalability right away. However, Ethereum’s “subsidiary chains” will also become up-to-date, as the network relies on a functional PoS network for its operation. It will spread the data payload of the network across 64 Blockchains. Shard chains will provide additional cheaper tiers for applications and aggregations to store data. It will also benefit from the security of the Ethereum mainnet. Meanwhile, it will enable tier 2 systems to offer low transaction fees.
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