After many memories of Ethereum’s successful transition, the question remains as to what comes next for the most commercially meaningful crypto project.
After many memories of Ethereum’s successful transition, the question remains as to what comes next for the most commercially meaningful crypto project. The long-awaited software revision, called Merge, has changed blockchain from a so-called proof-of-work system to a more efficient proof-of-stake method for securing the network. There are no changes to the network transaction costs or speeds, which are common among Ethereum users.
“It’s like changing the foundation of a skyscraper while it’s still standing,” said Harsh Rajat, co-founder of Ethereum Push Notification Service or EPNS based in Mumbai!
Now the developers will address an important existential question. Consolidation is the first step towards a series of upgrades on Ethereum to solve the scalability dilemma. After some time, the theory suggests that a blockchain must compromise with one in its three main aspects – scalability, decentralization and security. And that a blockchain cannot have all three at the same time.
For Ethereum, the first step to solving this problem is to move to POS with consolidation followed by four other stages of development.
- The Surge: Implement sharding, a scaling solution that will reduce the cost of associated transactions on Ethereum.
- The Verge: Introducing the ‘verkle tree’, an update that will make the network more decentralized by making it easier for users to become validators.
- The Purge: Erase historical data and technical debt.
- The Splurge: More updates after the first four phases to ensure smooth network operation.
“The ultimate goal of all these upgrades is to make Ethereum “It is more scalable, faster and cheaper to use,” said Aditya Khanduri, head of marketing at Biconomy, a protocol that helps improve user engagement and transaction experience on decentralized applications.
“It is difficult to talk about the timeline of the following four phases as they are all still under active research and development. However, in my opinion, it will easily take 2-3 years before all the stages are complete,” said Sameep Singhania, co-creator of QuickSwap, a decentralized exchange built on Ethereum scaling solution Polygon said.
The network will eventually be able to process 100,000 transactions per second upon completion of these five phases, according to Vitalik Buterin, co-founder of Ethereum.
Meanwhile, more investors in Ether, the network’s native token, is expected to lock their tokens in digital wallets to profit their holders in the new proof-of-stake format. But they won’t be able to get them out, at least not for a while.
Locked ether plays an important role on the upgraded network. The wallet has what is known as staking Ether being used to help order network transactions. Currently, about 11% of Ether is locked – either directly or through providers like Lido, Coinbase Global Inc. and Kraken — in Ethereum’s Beacon Chain staking wallet used to test the process, according to blockchain analytics firm Nansen.
Ethereum will have to undergo another software change called Shanghai, at least another six months, to allow withdrawal of the deposited Ether. Even then, the withdrawal amount will be limited.
“After the Consolidation, Ether locked in the staking contract will remain unavailable for withdrawal,” said Kunal Goel, a research analyst at Messari.
Ethereum developers are also working on something called EIP 4844, or Proto DankSharding, that seeks to mitigate the high network transaction costs that users call gas fees, Goel said.
