The upgrade in the fusion presented two significant modifications. The first one was EIP-3675 (Ethereum Improvement Proposal), which addressed the transition from the Proof of Work (PoW) consensus protocol to the Proof of Stake (PoS) protocol. The second one was EIP-4399, which established the maximum difficulty level that the network could reach before entering the "ice age" and ultimately allowed for the fusion.
Differences between Proof of Work (PoW) and Proof of Stake (PoS) algorithms
Ethereum began by using the PoW consensus algorithm, which is the same used by Bitcoin. Under PoW, miners solve complex mathematical problems to validate transactions and add blocks to the blockchain. However, this process is energy-intensive and limits the scalability of the network.
With PoS, validators are selected to forge new blocks based on the amount of cryptocurrency they own and are willing to "stake" as collateral. This transition aims to increase the energy efficiency of the network and improve its scalability.
From its beginnings, Ethereum's creators intended to switch to Proof of Stake (PoS) due to its perceived advantages, including energy efficiency and increased security.
PoS eliminates the need for mining as we know it in Proof of Work (PoW). In PoW, miners compete with each other to solve a complex mathematical problem, and the first one to solve it adds a new block to the chain, receiving new coins in return. This process requires a significant amount of energy and computational power.
On the other hand, PoS replaces miners with "validators." Instead of investing in energy-consuming computer farms, validators invest in the native tokens of the system. To become a validator and earn block rewards, tokens need to be locked or "staked" in a smart contract, a computer code that runs on the blockchain.
With the transition, miners are no longer necessary in the Ethereum network since the network no longer depends on solving complex mathematical problems for block validation. Instead, the validators who stake their Ethereum are the ones who maintain the network's security.
The Transition of Ethereum
The process to switch to Proof of Stake, known as "The Merge," began with the launch of the Beacon Chain (a parallel PoS blockchain) in December 2020. On September 6, 2022, the Ethereum community released the Bellatrix upgrade to initiate the process, which was later completed with the Paris upgrade when the Ethereum main chain changed to PoS.
In August 2022, the "difficulty bomb" was activated, a protocol that gradually increased the complexity of block mining in Ethereum. This process continued until reaching a peak point according to EIP-4399, at which point miners no longer produced new blocks, marking the beginning of the so-called "ice age." At that moment, the validators of the Ethereum 2.0 Proof of Stake (PoS) protocol came into action, carrying out the fusion of the different components of the network.
The change did not significantly affect regular Ethereum users. Addresses, wallets, and transactions will continue to function as before. However, the fact that the Ethereum blockchain consumes much less electricity is incredible news, and many developers are now focusing on rollup contracts to reduce transaction costs and enable scalability.
The transition from ETH to Proof of Stake (PoS) is a significant change in its consensus model, which has several important implications for miners. They will likely have to find other ways to maintain profitability, either by becoming validators in the Ethereum network or by shifting their operations to other cryptocurrencies that still use PoW.
Areas Benefiting from the Proof of Stake (PoW) Upgrade
- Energy and Environment: The transition to Proof of Stake reduced Ethereum's energy consumption by 99.95%. Under the PoW model, Ethereum consumed 113 terawatt-hours per year, equivalent to the energy consumption of the Netherlands. Additionally, PoW generates electronic waste, as specialized servers used for cryptocurrency mining often become obsolete in 1.5 years.
- Security and Decentralization: In Ethereum's PoS system, miners are replaced by "validators" who lock or "stake" their tokens in a smart contract. If they validate incorrect transactions or blocks, they face "penalties," which means that all their ethers are "burned."
- Scalability: With the transition to PoS, Ethereum aims to improve the scalability of its network. The Ethereum network under PoW could handle an average of 15 transactions per second, which was insufficient for the growing number of decentralized applications (dApps) and non-fungible token (NFT) transactions on the network.
- Implications for Ethereum Users: Although the transition to PoS is primarily an infrastructure upgrade, it may have some implications for Ethereum users. For example, the decrease in energy consumption could attract more users and developers concerned about the environmental impact of cryptocurrencies. Additionally, many developers will now focus on roll-up contracts to reduce transaction costs and enable scalability.
- Community Reactions: It is interesting to highlight the opinions of key figures in the Ethereum world. One of them is Vitalik Buterin, the co-founder of Ethereum, who has expressed his pride and enthusiasm for the successful completion of "The Merge," which represents Ethereum's transition to PoS in Ethereum 2.0.
And we finalized!— vitalik.eth (@VitalikButerin) September 15, 2022
Happy merge all. This is a big moment for the Ethereum ecosystem. Everyone who helped make the merge happen should feel very proud today.
Buterin has publicly shared his satisfaction with the progress in the development of Ethereum 2.0 and has praised the work done by the Ethereum research and development team. In a statement, Buterin highlighted that the completion of "The Merge" is a significant milestone on the path towards a more efficient and scalable Ethereum.
The co-founder of Ethereum has also emphasized the importance of this upgrade in addressing the sustainability and energy consumption challenges associated with the PoW algorithm. Buterin has expressed his confidence that the transition to PoS will allow Ethereum to offer a more environmentally friendly solution and promote the widespread adoption of blockchain technology.
- The Ethereum integration upgrade involved the transition from PoW to PoS and established a maximum difficulty level.
- The transition to PoS replaces miners with validators who stake tokens.
- The main goal is to improve the efficiency, scalability, and security of Ethereum.
- The upgrade has benefits in terms of energy, security, and scalability.
- The Ethereum community celebrates the milestone of transitioning to a more efficient and scalable Ethereum.
The fusion of Ethereum 1.0 and ETH 2.0 with the transition to Proof of Stake (PoS) marks a significant milestone in the platform's development. The upgrade enhances the network's security, attracting more users and developers concerned about the environmental impact. With the successful implementation of Ethereum 2.0, Ethereum is projected to solidify its position as one of the leading blockchain platforms and continue revolutionizing various industries in the future..
- Ethereum 2.0: Blockchain Revolution and the Most Anticipated Upgrade.
- Ethereum 2.0: Revolución Blockchain y la Actualización más esperada.
- Ethereum 2.0: Revolução Blockchain e a Atualização mais esperada.
- Ethereum 2.0: Révolution Blockchain et la mise à jour la plus attendue.
- Ethereum 2.0: Rivoluzione Blockchain e l'Aggiornamento più atteso.
- Ethereum 2.0: ブロックチェーンの革命と最も待たれたアップデート
- 이더리움 2.0: 블록체인 혁명과 가장 기대되는 업데이트.
- Эфириум 2.0: Блокчейн-революция и наиболее ожидаемое обновление