How Ethereum Merge has Impacted the Blockchain Industry, Including Polygon & L2layers?

[Mobiloitte Technologies]

Ethereum and Bitcoin are two of the most well-known Blockchain systems. Ethereum is considered to have done for DeFi what Bitcoin is believed to have done for cryptocurrencies. Ethereum is seen as having greater potential than Bitcoin. Both blockchain systems have implemented Proof-of-Work (PoW) as the consensus method. Proof of Work (PoW) and Proof of Stake (PoS), the two most prevalent consensus algorithms, check every transaction in the blockchain before printing them into the block.

After a lengthy process that lasted for six years, the Ethereum Merge is finally complete. The proof-of-work (PoW) model, which is currently the basis for the second most valued cryptocurrency, will soon be replaced by the proof-of-stake (PoS) model, which is anticipated to be substantially more energy- and cost-efficient. Although Proof of Work is thought to be the most secure method, it is a power-hungry technique that consumes a significant amount of electricity in the mining process. For instance, Bitcoin uses roughly 127 Terawatt-hours of electricity, which is more than Norway uses in a full year regarding the total amount of electricity it consumes. Furthermore, poS techniques need validators to store and stake tokens, unlike PoW mechanisms, which require miners to solve cryptographic challenges. Additionally, it consumes 99.9% less electricity compared to PoW.

Influence on DApps

The impact on dApps will be relatively insignificant since speed and costs won’t be significantly impacted. Another risk is associated with the PoW hard fork, as most decentralized applications (DApps) have stated that they will not accept the hard-forked chain and will instead support the ETH PoS chain. If a fork takes place, there is a possibility that specific DAP tokens will see increased volatility. As the other Ethereum testnets have been phased out, the only significant modification that will occur is the migration of our operations from the Kovan and Ropsten testnets to the Goerli network. This is the only change that will be of significance. Aside from this, the merger does not call for changes in how smart contracts carry out their operations on the chain.

The Merge upgrade is the first of five planned updates for the Ethereum blockchain and prepares the groundwork for the Surge upgrade. In addition, because of the significant drop in energy consumption caused by the Merge, institutional investors who were previously unable to buy tokens that run on blockchains that use the PoW consensus mechanism may now be able to buy ether (ETH) for the first time. This group of investors was previously prohibited from doing so. The creators of Ethereum realized a very long time ago that for Ethereum to keep up with the continuous developments in DeFi, Ethereum needs to be ESG compliant and have a low impact on the environment. However, Ethereum is too huge to perform such updates, and if there is a service disruption. In contrast, if the upgrade is being performed, it will be extremely expensive for all decentralized applications (DApps) that are either directly or indirectly running on Ethereum. Furthermore, any bug could affect the Ethereum in people’s wallets.

Read More: https://bit.ly/3UnNR8D