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The Ethereum ETH/USD ‘Merge’ is scheduled to take place early Thursday morning (Sept. 15), somewhere between 1:00 AM and 2:00 AM EDT.
The event will be a culmination of years of work conducted by Ethereum’s core developers. After a number of postponements, the proof-of-work and proof-of-stake Ethereum networks that have been running side by side will finally merge into one. The impacts will be enormous.
See Also: Ethereum Classic Soars As Ethereum Approaches Merge: What’s Happening?
Will ETH Get More Energy Efficient?
Perhaps the key point in the merge is it will make the network much more energy efficient. Crypto mining takes up massive amounts of energy. The switch from proof-of-work to proof-of-stake will rid the network of mining entirely, reducing energy consumption by 99.95%.
This is more than just good for the planet, it is also good for Ethereum’s narrative. Investors who previously would not touch cryptocurrency because of ESG standards or other moral dilemmas regarding harmful mining practices are now exempt from this burden. Think of Tesla dumping its Bitcoin BTC/USD and citing concerns about the energy usage from mining. With Ethereum providing a cleaner solution, it could even make a run on Bitcoin’s market capitalization.
Will ETH Become Deflationary?
The Merge will also lead to a deflationary supply of Ethereum. On the proof-of-stake network, miners are rewarded with ETH for verifying blocks. However, after the Merge, there will be no ETH rewards for miners thus reducing the supply. Miners also have had to cover the cost of their expensive hardware and energy use, which often leads to selling their ETH reward, and putting bearish pressure on ETH. Instead, token issuance will drop from 4% to 0.4% for validator rewards. Accounting for around a 2% burn rate thanks to EIP-1559, Ether is likely to deflate around 1.5% annually. And, with no more sell pressure from miners, ETH could see a bullish move upwards.
Will Transactions Get Cheaper?
Unfortunately, the merge does not fix the high gas fees on the network. While the Ethereum roadmap aims to fix this later, they will remain for now. According to the coin’s founder, Vitalik Buterin, Ethereum will be about “55% complete” following the Merge – so there will be scope for more improvements.
However, the event will encourage more layer-2 scaling solutions, which have been the best for high gas fees on ETH network to this point.
Will ETH Become More Decentralized?
Proof-of-stake lowers the barrier to entry for users wanting to validate the network. This is because it requires supercomputers to compete to validate the next block. The average user does not have the funds, or the know-how, to set up such a system. On proof-of-stake, just about anyone can lock up their ETH to secure the network and earn yield. Debate continues on the level of decentralization that proof-of-work has versus proof-of-stake, but at the moment, the latter seems more viable and decentralized.
Read Next: Ethereum (ETH) At $3,000 By End Of Year? Yes, if You Ask BitMEX Founder
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Image and article originally from www.benzinga.com. Read the original article here.