Golden Observation | a16z: What does the merger of Ethereum mean?
Text/Ali Yahya, a16zcrypto
The merger of Ethereum -- an important upgrade of Ethereum that took place early Thursday -- will become the most important moment in the history of open source. It's hard to think of a cooler example than this. A community of hundreds of developers from multiple organizations has promoted open research and hard technology development for many years.
Many people do not realize that it is a crazy feat to transition Ethereum to "proof of equity" (PoS), instead of "proof of work" (PoW), which is achieved through mining. This update involves the switching of the most important component of the Ethereum architecture - the consensus mechanism. The switchover is carried out when Ethereum is running normally. All this is done under the condition of perfectly guaranteeing the uptime of millions of users, thousands of decentralized applications (dapps) and the security of hundreds of billions of dollars.
I think Ethereum is a blockchain that is more superior than before. Why? Let's take a look at some of its many advantages.
The merged Ethereum now saves 100 times more energy than before. Participating in consensus no longer consumes a lot of power like the PoW mechanism.After consolidation, the energy consumption of ETH will be equivalent to that of web2 data center.
Each blockchain must pay for its own security (by paying token rewards to the verifier). The security budget of a PoW blockchain must include the miner's electricity charge plus the deposit. Because the "pledgor" - the verifier in the PoS mechanism - requires a lower rate of return than the miners in the PoW, without exception. PoS is much more efficient. In the current Ethereum, the budget of $1 is about 20 times larger.
In addition, PoW has limited ability to punish system attackers. This is because most of their assets are offline mining machines. PoS can directly access the "pledged funds" of each verifier, that is, the funds deposited by the verifier to ensure network security or the "risk sharing" guarantee. This makes the PoS incentive mechanism more refined and further improves the security.
Equity and decentralization
PoW is subject to economies of scale. Compared with smaller miners, the largest miners have advantages, while small-scale miners are often unable to participate in the game. PoS does not have this problem - anyone with 32 ETHs can now participate as a verifier of Ethereum.
Transactions on the PoW blockchain are never really final transactions. The final certainty is probabilistic, so it is always possible to rollback the transaction. On the PoS blockchain, the agreed transaction is the final transaction.
The certainty of transactions on Ethereum will lay the foundation for future work, improve the scalability of Ethereum (through L2 solutions, such as rollup), connect to other blockchains (through cross chain bridges), and build an abstract environment that is easier for developers to use and reason.
Consolidation is a big event. It is an important step forward for encryption technology and web3. It brings us closer to a world that benefits from an efficient and secure decentralized computing layer, which can support compatible applications that we all want to build.
At this moment, too much happened behind the scenes.