The second largest cryptocurrency is going under the major software upgradation called “the Merge”. Ethereum Merge — The most hyped event in the crypto industry is around the corner, and you must be wondering what it is and how to benefit from this.
- Ethereum will be called Eth 2.0.
- Ethereum is moving from Proof-of-work (POW) to Proof-of-stake (POS).
- Ethereum is migrating to a less energy-intensive technology to power its blockchain.
- You can earn extra yield by becoming a validator on Ethereum’s POS beacon Chain.
- If you’re holding Ethereum in any centralized exchange, you’ve to do nothing.
What is Ethereum Merge?
Ethereum Merge means “connecting Ethereum’s main execution layer (commonly called Ethereum mainnet) with Ethereum’s new Beacon Chain proof-of-stake consensus layer”. The new system will do away with the need for energy-intensive mining to secure the network with staked ETH.
What are all new updates coming up?
The list for all new updates coming up with “the Merge” are as follows:
- Ethereum will now work on Proof-of-stake consensus.
- The network will be more sustainable as it will slash off 99.95% of the current Ethereum blockchain’s energy consumption.
- Transaction will become faster with the POS consensus.
- The network fees will be much more affordable.
How is POS (proof-of-stake) different from POW (proof-of-work)?
Several consensus mechanisms are used to verify transactions on the blockchain network.
Currently, in Proof-of-work Ethereum miners use a heavy computer system to solve complex mathematical equations to verify a single transaction. Resulting in high energy consumption and delayed transactions.
Now switching to Proof-of-stake, Ethereum owners must lock up a certain amount of their currencies to check new records on the blockchain, earning extra coins on top of their “staked” Ethereum.
How can an Ethereum investor be benefitted from this?
As an Ethereum investor, you can become a validator on the POS beacon chain by just staking your 32 eth tokens and earning additional network rewards.
If you don’t have so much technical knowledge and a large amount of Ethereum, got you covered.
You can participate in a centralized exchange staking program to earn rewards on your Ethereum.
If you aren’t comfortable holding your Ethereum on any centralized exchanges, you can also stake them on liquid staking pools like Lido, where you’ll get the “Lido stake Ethereum.”
What Should I do if I’m an Ethereum Holder?
An Ethereum Holder need not take action if you are using Ethereum applications on-chain, storing your Eth in a self-managed wallet, or on an exchange. If an application, exchange, or wallet you use provides further instructions or recommendations, verify that they are genuine. Keep an eye out for con artists!
The Merge is the biggest event in the history of cryptocurrency, as the fundamentals of any blockchain would change. It will lead to the high adoption of the Ethereum blockchain and benefit the Defi ecosystem. It is interesting to see how the market reacts to Ethereum merge.
Disclaimer: It is purely for educational purposes, neither a marketing post nor a piece of financial advice.