Ethereum developers plan to upgrade the blockchain to a proof of stake version by August this year. This step will solve the difficulty of the Ethereum network and take Ethereum 2.0 towards completion.
The core Ethereum developer Van Loon talked about the finalizing of the upgrade in the panel discussion. “As far as we know, if everything goes to plan, August, it makes sense,” he said while referring to the merge.
The Merge is basically an event when the proof-of-stake beacon chain and Ethereum blockchain will merge together. As a result, the ethereum platform will no longer run on proof of work.
Proof of work requires miners to use powerful computers for registering transactional data. As a reward for their work, they get paid in ETH.
Proof of Stake is considered a more sustainable consensus mechanism for the Ethereum blockchain. It makes it easier for holders to participate in the network. Users can stake ETH and earn rewards. It offers decentralization and increased security.
The upgrade will also reduce the supply of ETH in circulation by 90%. Supply and discrepancy will likely lead to higher coin prices. Some ETH enthusiasts believe that the price of ETH may go beyond the all-time high of $4,891.
The merge will take Ethereum closer to ‘Ethereum 2.0’ which has been in the making since December 2020. There is yet another major upgrade after The Merge which is known as the sharding of the Ethereum blockchain. This will divide the network. “With shard chains, validators only need to store/run data for the shard they’re validating, not the entire network (like what happens today). This speeds things up and drastically reduces hardware requirements,” says the Ethereum Foundation.