One year ago, Ethereum made a major transition to proof of stake (PoS), leaving behind the energy-intensive proof of work (PoW) consensus mechanism. While the price of Ethereum hasn’t seen significant changes since the transition, there have been notable developments under the surface.
One of the most significant impacts of the merge was a drastic reduction in Ethereum’s energy consumption. The network’s carbon footprint shrank by 99.99%, addressing concerns about crypto’s environmental impact. This shift has helped improve the credibility and believability of the technology, which was previously hindered by environmental criticisms.
Since the merge, the amount of Ethereum staked has nearly doubled, with 26.5 million Ethereum worth close to $43 billion currently staked. However, there have been concerns about centralization and censorship as control over verifying transactions could become concentrated in the hands of a few entities.
Liquid staking has become popular in the Ethereum ecosystem, allowing users to pledge their tokens for rewards while still leveraging their value through issued and pegged tokens. Despite concerns about centralization, liquid staking tokens have contributed to the growth of decentralized finance.
While the merge wasn’t intended to improve Ethereum’s transaction speed, it set the stage for future scalability improvements. Layer-2 scaling solutions have seen significant progress, with average transactions per second surpassing 50 on layer-2 networks compared to last year’s figures on Ethereum.
Staking has also become a regulatory concern in the U.S., with the SEC targeting exchanges offering staking services. The classification of Ethereum itself is still a point of contention between regulators, with conflicting views from the SEC and CFTC.
The merge has also resulted in a decrease in Ethereum’s overall supply due to changes in issuance and burning mechanisms. While it may not have grabbed headlines like other events in crypto history, it has provided renewed confidence in Ethereum’s ability to achieve technical upgrades and ambitious goals.
Developers are already working on Ethereum’s next big upgrade, “Dencun,” which aims to scale the network to over 100,000 transactions per second through features like proto-danksharding and account abstraction.
In conclusion, the merge to proof of stake has brought significant changes to Ethereum in terms of energy consumption, staking, scalability solutions, regulatory concerns, and overall supply. It has set the stage for future improvements and solidified Ethereum’s position as a leading blockchain platform.
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