Here’s what happened in blockchain and crypto this week.
“The Merge” – Ethereum’s long-awaited move to Proof-of-Stake – is coming soon, at least according to the projection of some of the network’s key community members. Ethereum developers suggested this week that the merge from Proof-of-Work (PoW) to Proof-of-Stake (PoS) could take place the week of September 19th during an update call. After weeks of bearish headlines for the crypto industry, the Merge event could be a positive catalyst for the ecosystem.
Core Ethereum developer Tim Beiko proposed September 19 as the tentative target date for the Merge in Thursday’s call. Later, Beacon Chain community manager superphiz.eth acknowledged that “This merge timeline isn’t final, but it’s extremely exciting to see it coming together” in a tweet. Prior to merging the mainnet with ETH 2.0’s Beacon Chain, a Merge dress rehearsal has been taking place in the form of several Ethereum testnets such as Sepolia merging with the network. The final trial of the Merge is set to occur on the Goerli network, which is scheduled for the second week of August.
Ethereum will soon change its consensus mechanism and thus the way transactions are validated. Ethereum currently works very similar to Bitcoin insofar as transactions are mined by a decentralized network of computers, which compete to solve a mathematical puzzle. In return for finding a block, they are rewarded with new ETH. Simply put, under PoS transactions are confirmed by addresses that have staked ETH. The higher a user’s or group of users’ staked ETH, the higher the staking rewards.
The Ethereum community has been working on the transition to PoS ever since the chain launched in 2015. The blockchain’s transition journey to a Pos-based ETH 2.0 began on December 1, 2020, with the launch of Beacon Chain, kickstarting Phase 0 of the transition. Phase 1 of the program was scheduled to launch in mid-2021 but got postponed to 1Q22 owing several factors including complexities involved in the code auditing.
The Merge will have a number of technical, monetary, economic, and social ramifications including a significant drop in energy consumption as well as a disinflationary or even deflationary issuance of ETH. Despite the community’s excitement and anticipation, however, there are still some misconceptions surrounding the Merge. Contrary to popular belief, the Merge will not immediately reduce transaction fees on the network, nor will it immediately allow users to withdraw the ETH locked in Ethereum 2.0’s staking smart contract. Also, another key stage in the ETH 2.0 upgrade, known as “sharding,” isn’t expected to take place until 2023.
The global cryptoasset market capitalization currently amounts to $975 billion – down from $988 billion since Friday last week, with bitcoin accounting for 40.8%. Among the Top 30 cryptoassets by market cap, Polygon (MATIC) outperformed, gaining 23.3% over the week. During the same period, the price of bitcoin (BTC) fell by 3.7% to $20,849 while the price of ether (ETH) decreased slightly by 1% to $1,228. The total value locked (TVL) in DeFi sits at $76.6 billion – down from $77.8 billion last week – with Ethereum accounting for about 63% of TVL.
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Notable Deals and Fundraising
Manuel Trojovsky, Head of Crypto Investments & Research
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