- Ethereum now uses a Proof-of-Stake consensus mechanism thanks to the successful completion of the Merge
- Abandoning Proof-of-Work is expected to reduce the energy consumption of the Ethereum network by more than 99%
- The issuance of new ETH has been reduced by around 90%, and the total ETH supply has even seen a small decrease following the Merge
Ethereum successfully moves to Proof-of-Stake with Merge upgrade
The Ethereum blockchain has successfully transitioned to Proof-of-Stake through the Merge, the most significant upgrade in the network’s 7-year history. The Merge was activated at around 6:42 AM UTC, when the Proof-of-Work chain’s total terminal difficulty (TTD) reached the agreed-upon level of 58,750,000,000,000,000,000,000.
With the upgrade completed, Ethereum has abandoned the energy-intensive Proof-of-Work consensus mechanism, and now uses Proof-of-Stake. This will reduce the energy consumption of the Ethereum network by more than 99%.
In terms of performance, users likely won’t be noticing any major improvements now that the Merge is completed. On average, new blocks will be added to the Ethereum blockchain about 10% faster than before, but most users likely won’t be able to tell the difference.
The Merge itself also won’t impact transaction fees, as the upgrade does not expand the Ethereum network’s capacity. Given the same demand for transactions, the post-Merge fees will be the same as they were on Proof-of-Work.
Gnosis co-founder Martin Köppelman noted that the Ethereum network has been displaying very strong stability in its block times after the Merge.
The block times of the last 100 blocks!— Martin Köppelmann ?? (@koeppelmann) September 15, 2022
Amazing stability after the merge! Only 1 missed block.
This is really the best case scenario! pic.twitter.com/dV1PF70vCL
Since miners are no longer a part of the Ethereum network after the Merge, there’s no more need to issue new ETH to reward them. The total number of ETH issued to reward Proof-of-Stake validators is much smaller. According to the Ethereum Foundation, the Merge is expected to reduce the issuance of new ETH by about 90%.
Since Ethereum adopted the EIP-1559 proposal in 2021, the network has been burning the base transaction fee paid by users. Combined with the drastically reduced issuance of ETH after the Merge, it’s possible that the total supply of ETH will begin to decrease. According to ultrasound.money, the ETH supply has been reduced by 185.51 ETH since the Merge was completed. Whether this trend continues or not will depend on network conditions.
ETH markets have been quiet despite the Merge completing successfully. The price of ETH has seen a minor dip from $1,660 to around $1,610, and the cryptocurrency is currently posting a 24-hour change of about -1%.