A long-awaited upgrade to Ethereum, the most popular crypto platform, may make the technology more environmentally sustainable. But it comes with risks. We’ve asked Embily’s blockchain and Golang developer.
- How will the Ethereum Merge influence the price of ETH?
It will probably increase the price, but this kind of event is happening for the first time, and it is challenging to predict the exchange rate.
- What are the 3 things holders of ETH should do before the merge?
1. Move funds to a cold wallet before merging.
2. Keep tracking the information from official sources as the Merge proceeds.
3. Move back and continue to use ETH as you did before the Merge.
- What are the 3 key indicators to follow during the Merge?
1. Avoid unnecessary transfers of funds during the Merge.
2. There may be a lot of speculation and false information about the Merge in the media space, so do not panic.
3. Try to be guided only by official information from the community of developers.
- Buy, sell, stake, or hold before the Merge?
- Three pros and three cons of the Merge?
1. The Proof-of-Work mechanism causes enormous energy consumption. On average, it takes 282,394 trillion actions to find a hash of 64 characters in length, requiring consumption of about 121.36 terawatt hours (TWh) per year. But these calculations have no value other than protecting the network. So PoS will reduce electricity consumption by 99.9%, making it much more environmentally friendly. It requires no special expensive equipment, and validators would only need to stake 32 ETH to be able to validate transactions and issue blocks and coins.
2. Inflation vs deflation of ETH. The transition will fundamentally change Ethereum's tokenomics and slow the annual inflation rate to less than 1%. Thus, ETH will become an asset with a value accumulation function, thanks to the redistribution of burning and emission mechanisms. ETH emission will drop by 90%.
3. The danger of a 51% attack and other PoW vulnerabilities. Theoretically, if a node receives 51% of the network's total mining power, it can modify the network at will. Such an attack in PoS requires significant resources (51% of all coins), making it impractical. If the hacker owns lots of tokens, it is not profitable for them to attack the network on their own, as it will collapse the rate and they will lose their money.
1. Some analysts have concerns about the move to PoS because of possible centralization. According to Lyn Olden's article, in PoS, earnings depend on the number of coins in the stack. You do not need a lot of resources to reserve coins, you just need to fulfil your validation stack with the interest from staking and gradually build up your influence in the network.
Let us take a hypothetical assumption, if this were a political system, a candidate would get a vote for every hundred dollars, and then for every vote, he would get another dollar from the government.
2. There is also the threat that the initial coin holders would not be interested in spending their coins, since their balance directly contributes to their wealth. For example, PeerCoin uses elements of PoW to create new coins.
3. Another problem with PoS concerns a "long-range attack." Hackers can control old keys and use them to create a competing version of the chain.
- Does it influence your users in any way?
Users are unlikely to notice any changes other than those described above. Of course, if the Merge is successful, of course.
Many thanks to Sergey Umarov, Embily blockchain and golang developer.
Nothing in the Site constitutes professional and/or financial advice, nor does any information on the Site constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. HII is not a fiduciary by virtue of any person's use of or access to the Site or Content.