- Ethereum has successfully transitioned to a PoS network
- Yet there remains work to be done regarding the future of Ethereum and its impact on stakeholders
- Censorship, the hard fork, and centralisation are all unsolved issues that will persist long after today
At approximately 6:58am UTC on 15 September, one of the most prominent events in the entire crypto and blockchain industry took place. Ethereum merged its network with the Beacon Chain, marking the transition from Ethereum’s Proof of Work consensus protocol to a Proof of Stake network.
This marks the first time in blockchain history where a chain has transition between different consensus layers, and is thus a momentous moment for engineers, investors, and exchanges alike.
To oversee the events unfolding in the moments leading up to The Merge, a livestream session was set up, attended by prominent personalities from the Ethereum community such as Bankless, EthStaker, Ethereum Cat Herders, The Daily Gwei, along with many other notable guests, Ethereum developers, and of course, Ethereum Co-Founder Vitalik Buterin himself.
The first significant milestone in the moments leading up to The Merge was the observation of the terminal block. At the time, the PoW chain still exists, and the Beacon Chain is waiting for the terminal block, which marks the last mined block registered on the Ethereum Mainnet. Upon its arrival, the beacon chain will take over and validators will begin validating blocks. This will mark the point where the first merged PoS block will be built.
Etheruem’s mainnet Merge viewing party, comprising of eEthereum developers and notable figures from the community.
The PoS network will continue building blocks, and validators will also send attestations to explain what they are observing from their end as validators to ensure everything runs smoothly. The first 12-15 minutes after the terminal block lands would be critical, as it will determine the overall health of the transition towards the beacon chain.
True enough, the terminal block established itself to much applause and celebration at approximately 6:43am UTC, and participation on the beacon chain was healthy all around. Screens lit up green and blocks began appearing on the new chain, in the first epoch. At this time, it was observed that GPU miners on the Ethereum PoW network were no longer active, as mined blocks that were created after the terminal block landed would no longer appear on the Ethereum Mainnet and be registered accordingly.
The next milestone would be for the new PoS chain to hit finality. This was the point where the finalised block would be locked in, together with everything that came between the terminal block and finalised block.
There were some hiccups along the way however, with some slots being missed on a few epochs. However, a 99% dissipation rate for The Merge would definitely mean that there would be some slots on the epochs that would be missed every once in a while, after the terminal block lands. On the overall however, most of the slots were still showing green and being successfully validated.
At 6:58am UTC, the new PoS network hit finality to great celebration. This was the point where the finalised block would be locked in, together with everything that came between the terminal block and finalised block.
Ethereum employees celebrating finalisation
“This is the economic certification that we are firmly and irreversibly in the Proof of Stake network”, an Ethereum developer stated.
Applause and hurrahs erupted all across the live stream and the Ethereum Foundation, with employees celebrating despite the long hours of work leading up to The Merge.
To this, Vitalik shared a few words with the celebrating crowd:
“This is the first step for Ethereum towards a very mature system. We still have to scale, we still have to fix privacy, and we still have to make the system more secure for regular users. The Merge symbolises the difference between early stage Ethereum, and the Ethereum we have always wanted.”
Ethereum Co-Founder Vitalik Buterin weighing in on The Merge after Finalisation
Indeed, there remains work to be done still. Privacy considerations and censorship for instance, forming a significant part of them. In stark contrast to previous claims on shutting down staking services instead of censorship by regulators by Coinbase CEO Brian Armstrong, the company, which holds 15% of all staked ETH in the market right now, seems to possess a blacklist function embedded in a smart contract for its users. This would allow Coinbase to selectively blacklist addresses if they deem it necessary, or if the exchange believes that the wallet violates its user agreement.
Joining Coinbase is USDC issuer Circle, who has also similarly frozen funds linked to mixing service Tornado Cash, that had been sanctioned by the US Department of Treasury for alleged terrorist financing and money laundering.
Another primary concern would be centralisation, wherein large corporations would arguably hold the largest staked ETH in the market, thereby commanding the largest share of validator power. This in turn raises questions as to the ethos of decentralisation of Ethereum’s Proof of Stake system, to the extent that large institutions are likely to be strong-armed by authorities and regulations.
Finally, miners who have had to cease all mining activities on the Ethereum network are also thrown into a rut as a result of The Merge, with GPUs flooding the market and anxieties regarding a forked “ETHPoW” chain arising that could double the amount of Ethereum asset and tokens on the market, while liquidity remains unchanged, leading to heightened risks of a crisis there.
Just as Vitalik says that there remains work to be done. The Merge is not a single event that takes place in a few minutes, but rather, is an aggregated event that will spend years. Sharding and the upcoming Shanghai upgrade will put the Ethereum Foundation once again to the test, together with everyone in the crypto community.
The terminal block might have landed, but there is still a long way to go for The Merge.
This is an Op-ed article. The opinions expressed in this article are the author’s own. Readers should take the utmost precaution before making decisions in the crypto market. Coinlive is not responsible or liable for any content, accuracy or quality within the article or for any damage or loss to be caused by and in connection to it.