The Merge is now complete, and Ethereum has successfully transitioned to Proof-of-Stake. What was arguably the most anticipated event in the cryptocurrency space in recent years has now concluded.
And we finalized!
— vitalik.eth (@VitalikButerin) September 15, 2022
Happy merge all. This is a big moment for the Ethereum ecosystem. Everyone who helped make the merge happen should feel very proud today.
The proof-of-work mainnet officially merged with the proof-of-stake Beacon Chain, completing the protocol’s transition to PoS. The Paris upgrade, also known as “the Merge,” was recently completed with a Total Terminal Difficulty of 58750000000000000000000.
This marked the official transition of Ethereum from a proof-of-work consensus algorithm to a proof-of-stake algorithm. It is also introducing entirely new token emission dynamics and tokenomics to the protocol, which are anticipated to have far-reaching long-term consequences for the entire ecosystem.
The Merge itself represents the consolidation of the consensus layer (previously the Beacon Chain) and the execution layer (formerly the PoW chain).
One of the most significant economic implications for ETH holders is the fact that mining has been officially halted. This will cut the amount of new ETH entering the market by 90%, effectively lowering the amount of money required to support current prices significantly.
Even though the Merge is now complete, it is important to note that Ethereum still has a long way to go before it can realize its team’s vision. The incentive of Ethereum’s Proof-of-Stake transition goes beyond reduced ETH emissions and focuses on optimizing the network for greater transactional throughput and scalability. This, however, will not happen overnight.
Ethereum developers will now concentrate on increasing the blockchain’s scalability through rollups. Rollups, also known as layer 2 networks, bundle transactions on their own chains and settle them all at once on Ethereum. This splitting approach enables layer 2s to execute transactions much more cheaply and quickly, while still reaping the benefits of Ethereum’s security (albeit with some compromises).
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