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4 reasons why we are excited about the Ethereum Merge

4 reasons why we are excited about the Ethereum Merge

As The Merge draws near, questions are arising. We sat down with our CTO Alexandre Cognard and chairman Frédéric Montagnon to discuss its significance for brands, users, and more broadly - the web3 ecosystem. They are pumped, and here are 4 reasons why:

“No more competition, but coopetition” - Alexandre Cognard

Ethereum started as a Proof-of-Work (PoW) blockchain, meaning it relies on miners to secure its network. In PoW, miners compete against one another in a round-the-clock race to solve a complex cryptographic puzzle. Any miner who cracks the problem first will be rewarded with newly minted coins. This consumes an enormous amount of computing power and electricity.

With Ethereum’s transition from Proof-of-Work to Proof-of-Stake, miners will be replaced by stakers. Instead of investing in energy-guzzling computer farms, you invest in the system’s native coins. To become a staker, you have to lock up 32 ETH. (micro holders can also pool their ETH to profit from staking as well). Since these validators stake their own crypto, they have an incentive to do a better job (otherwise their ETH will start to dip). What this means is there will no longer be competition, but coopetition.

Today’s world is putting too much decision-making power on miners. This merge will finally shift the power back to users.

“A critical step towards a sustainable future for Ethereum” - Frédéric Montagnon

As discussed above, PoW is very energy-intensive. PoW is a suitable consensus mechanism for applications that need the highest censorship resistance capacity (such as Bitcoin as a currency), but a large part of what is built in web3 doesn’t need such a strong feature.  Additionally, it produces a sizable amount of e-waste from the specialized hardware that usually depreciates after 1.5 years.

Fortunately, the Merge will reduce the energy footprint of the Ethereum blockchain by 99.95%. And we’re talking about serious energy savings that are about equal to the annual electricity consumption of a quarter of the world's data centers.

Therefore, comments saying blockchain are bad for the environment won't be accurate anymore for Ethereum, which leads us to the next point.

“We can expect to see mass adoption from brands” - Frédéric Montagnon

The whole Ethereum ecosystem (which is the more active in the web3 space, by far) relies on the Ethereum Mainnet (AKA Layer 1). Even though other layers bring scalability with light energy consumption, CO2 emissions have to be computed globally, including the Mainnet. With the merge, all the calculation of emission will dramatically drop overnight. Corporates who were waiting for a more sustainable solution will certainly reassess and eventually have more confidence to launch their project.

“It’s the first step in the network’s long-term vision” - Alexandre Cognard

Don't forget that The Merge is only a step, a big step in Ethereum’s roadmap for increased transaction speed, throughput, and security and reduced transaction fees. There’s plenty more: the Surge, the Verge, the Purge, and a Splurge. Vitalik Buterin claims that following the 5 key stages, Ethereum will be able to process "100,000 transactions per second". 🚀

What does the Merge mean for Arianee clients and users?

For Arianee’s clients and users, The Merge will not change things directly. But this event will stabilize the long-term vision of blockchains, and therefore Arianee will benefit from it.

Arianee operates on two Ethereum side chains under Proof-of-Authority (PoA) and Polygon PoS which are very efficient in terms of energy consumption. As a reminder, when the Arianee infrastructure reaches its maximum capacity (around 200 million NFTs/year), it will only consume the equivalent of 25% of the energy consumed by a French family in one year. We’ll continue with this rigor and focus on driving scalable solutions for our clients and users.

“Be vigilant for fake news” - Frédéric Montagnon

As we enter this transitional phase of web3, there are bound to be hiccups along the way, according to both Fred and Alex.

Miners are being put out of business. Having collectively invested some $4 billion in hardware, it seems that they won't drop it and will try to preserve their business. Be vigilant for debates, market manipulation and fake information in the coming months!

6 years in the making, the Merge is a milestone that encapsulates the enormous effort in research and engineering from Ethereum to decarbonize, moving towards a more sustainable future. What’s your take on it?

Feeling inspired?