Ethereum Network Is Expected To Shift From A Proof-Of-Work To A Proof-Of-Stake Model
By September 15, the Ethereum network is anticipated to switch from a proof-of-work architecture to a proof-of-stake one. What this means is that validators, also known as miners, will now require 32 ETH to be staked before a user can become a validator, also known as proof of stake. Previously, validators had to solve complex mathematical calculations using supercomputers to add a block to the blockchain, which is also known as proof of work.
What effects will the Ethereum Merge have? According to Vikram Subburaj, CEO of Giottus Crypto Platform“The Merge is the transition of Ethereum (ETH) blockchain to the Proof-of-Stake (PoS) consensus mechanism. It is expected to reduce energy consumption on the network by 99 per cent and will also result in a 90 percent net drop in annual issuance of ETH. While the Merge will change the consensus mechanism; it will not increase the capacity of the Ethereum network. The Merge may lead to forked chains similar to Ethereum Classic (ETC) that split from Ethereum in 2016.”
How will it affect the price? “In the shorter term, I don't foresee any upward moment because the news was already there. What I expect is there might be a price correction if the proof of stake, take two points down the line, and then we upgrade,” Subburaj added.
“In the short term, the Merge may lead to high volatility in ETH prices depending on the success and outcomes from it. Over the long term, though, this will make Ethereum a stronger crypto asset. For now, investors should only hold Ethereum on a wallet or exchange that supports the Merge and any new forks. All coins will be automatically transferred to the new blockchain while any new forked coins will also be issued to the investor. NFT holders are encouraged to hold their NFTs in private wallets,” Subburaj continued.