The Merge is here: Ethereum has switched to proof of stake

Like Bitcoin, Ethereum approved new transactions on the blockchain with a consensus mechanism known as proof of work, whereby “miners” race to solve tough math problems using massive amounts of computing power and get rewarded for their efforts in the crypto space. That method consumes a lot of energy. It also set out challenge expansion for Ethereum: network congestion increases fees and slows down processing speeds, making the network too expensive for smaller transactions and difficult to scale for larger transactions.

Proof of stake, on the other hand, requires “validators” to stake – a cache of ether tokens in this case – for a chance to be selected to approve transactions and earn a token. small rewards. The more validators bet, the greater the chance of winning the reward. But all ether staked will earn interestthis turns staking into something like buying stocks or bonds with no computing costs.

Decentralization –– the idea that decision making and control should be distributed rather than consolidated in a single authority – always is the key to Ethereum’s vision. But that ideal has been difficult to achieve with proof of work. While this mechanism is intended to promote decentralization, in practice individuals or groups have access to substantial computing power. yes exploit the dominant proof of work and reap the benefits.

screenshot of Google search results widget with countdown to merging ethereum and hi-fiving bears
Google search results for “Ethereum Merge” have a countdown timer in the days leading up to the event.

By reducing the cost required to join and cutting fees through improved efficiency, the move to proof of stake could help Ethereum Distributing transactions across a broader and more diverse set of users and validators. But dynamics is still a concern. The minimum you can bet to become a validator is 32 ether (ETH), worth around $51,000 as of Wednesday afternoon, although individuals can join together in a zoned swimming pool to meet the request.

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