The Merge of the Ethereum
Ethereum, the world's second largest blockchain, has switched from the legacy "proof-of-work" consensus mechanism to a "proof-of-stake" consensus mechanism.
The Ethereum Merge is a software upgrade that alters how new crypto transactions are recorded on the blockchain.
The Ethereum Merge connects Ethereum's proof-of-stake (PoS) Beacon Chain to the Ethereum Mainnet.
Prior to this update, Ethereum ran in a proof-of-work mode, which required nodes (computers in a large network) to compete with one another to solve complex math problems. Successful miners can mine the next block of a transaction and generate new coins.
Using this method, crypto consumed nearly the same amount of power as Finland, while its carbon footprint is comparable to Switzerland.
Mining nodes are not required to compete for block rewards in the proof-of-stake model.
Instead, node operators must stake 32 Ether (ETH) as collateral in order to become network validators and earn rewards.
Staking is a process in which users lock up their Ether in a pool in the PoS model.
They are then chosen at random to validate the transaction.
The nodes are chosen by an algorithm that prefers nodes with more of a network's currency.
This means that the "stake" of nodes is rewarded rather than computer power, as in the proof-of-work model.
This model ensured that Ethereum's energy consumption was reduced by 99.95%. This amount of energy is nearly equivalent to New Zealand's initial energy consumption.
Ethereum is a blockchain that is decentralised and open source. Ether is the platform's native cryptocurrency. It is currently the second most popular cryptocurrency after Bitcoin. The Ethereum blockchain powers crypto ecosystem innovations such as Non-Fungible Tokens (NFTs).