As part of this update, Ethereum switched from a proof-of-work system that requires a lot of computing power to “mine” Ethereum to a proof-of-stake system that lets users validate new blocks on the chain (the so-called permanent ledger) and earn new Eth tokens by staking existing Eth tokens.
New studies show that Proof-of-Stake will cut CO2 emissions from Ethereum by 99.99%. On its website, Ethereum compares the switch to how much electricity Finland uses in a year.
Proof-of-stake isn’t something new; both Tezos and Solana use it. Ethereum’s switch took so long because it was built on a system called “proof-of-work,” and at times it seemed impossible to change the architecture. So far, Thursday’s change has been going well.
Josh Hardy, who is in charge of technology for the NFT platform Daata, told ARTnews that this is a big moment in the history of crypto. “So much noise was made of the environmental issue and it has been a real factor working against against the whole movement. It was a totally legitimate concern but the fact that it justified entire other blockchains is kind of crazy.”
As the Ethereum debate about the environment went on, Daata thought about minting their artists’ work on Tezos, which is a proof-of-stake chain. Hardy pushed for Ethereum to grow. He said, “I knew the Merge was coming, so Daata shouldn’t switch to less valuable chains.” Eth’s highest price per token was $4,000, and Tezos’s was $8.
Even though the environmental debate annoyed Hardy, he said that the Merge wouldn’t have happened so quickly without environmental activists. He said that was why the Ethereum Foundation pushed for it.
Jon Perkins, who helped start SuperRare, has a different view of the Merge. In the beginning, proof-of-work was seen as a bad thing that had to be done to get Eth off the ground, he said. From the beginning, the developers said that proof-of-stake would be added soon.
Merge comes after the NFT bull run of 2021 and the criticisms of cryptocurrencies. In a hard time, this is a big win for NFT. After the crypto crash of 2022, the market for crypto went from $3 trillion to $1 trillion, and the number of NFTs sold dropped by a huge amount.
When Vitalik Buterin, then a teenager, made Ethereum and it came out in 2015, it had some major technical problems. The next change to Ethereum’s code will make it able to handle more traffic. When a lot of people use Ethereum, “gas fees” can go up from $10 to thousands, depending on the transaction. Developers are sure they can make these other changes now that the Merge went well. It was a risk to build on Ethereum because it wasn’t clear if these fixes could be made.
When SuperRare started building on Ethereum in 2017, cofounder John Crain said the company put a lot of faith in the open source ecosystem’s core developers. This makes people feel better about the future because it makes building on Ethereum less risky in the long run.
Crain and Perkins hope that the Merge will help NFTs get back to where they were in the middle of 2021 and bring in more investors.
Perkins said Hundreds of thousands of people who have been sitting on the sidelines now feel like they can join the crypto market.
Now that Ethereum is just as good for the environment as other proof-of-stake chains, it’s not clear if other chains can compete without that edge. Artist and environmentalist Joanie Lemercier has been mining Tezos since the beginning and has no plans to stop.
“I’m not a millionaire like the few friends I have who minted on Ethereum and dismissed the environmental issues,” said Lemercier. Even though his work didn’t sell for “ridiculous” prices, sales have been steady and haven’t been as affected by the crypto crash as artists trading on Ethereum. He is selling about as much as he did last year, which is more than when he sold his physical work in a New York gallery.
Lemercier said, “And the fact that the Merge didn’t really help to push the value of Ethereum is not a good sign.
” Since people aren’t buying Ethereum, there’s no reason to switch.
Even though news sites and social media were full of good news, Ethereum’s price barely moved from $1,400, which is down more than 60% from last year. Still too soon.
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