Here’s what experts have to say about the impact of The Merge upgrade on the Ethereum ecosystem and other blockchain networks.
We are just a little more than a month away from when The Merge upgrade will finally go live on the Ethereum mainnet by mid-September. This upgrade will be a defining moment in Ethereum’s transition to a Proof-of-Stake (PoS) blockchain network.
As per the current timeline, the Ethereum blockchain will undergo the Merge upgrade on September 19. Also, over the next week, the Merge implementation will take place on the Goerli testnet.
The transition to Ethereum PoS has been two years in the making and focused more on improving the network scalability. The implementation of the Beacon Chain marked the shift towards PoS allowing users to stake their ETH and become network validators. This Beacon Chain exists alongside the Ethereum mainnet. As per the plan, both – mainnet and Beacon Chain – will be linked to The Merge eventually.
However, the transition to Ethereum PoS has had its own set of delays over the last two years. Although the excitement surrounding The Merge upgrade is valid, one cannot rule out the possibility of another unforeseen delay. Speaking to CoinTelegraph, Marius Ciubotariu, co-founder of DeFi lending platform Hubble Protocol said:
“PoS is not live yet; however, I do not see this as a concern. I understand the Merge has taken longer than some would expect. But, with new technology and the opportunity for critical issues, a non-rushed approach is the best one. As this Merge goes live, I’m confident more protocols will show up. We’ll continue innovation within the Ethereum community; something I have and continue to enjoy seeing/experiencing.”
Impact of The Merge on Ethereum Ecosystem
The shift of the consensus model from PoW to PoS, changes a lot of things for Ethereum on the technical front. Barney Chambers, co-founder of cross-chain DeFi platform Umbria Network believes that the Merge will be challenging. He also believes that the accumulation of ETH will centralize in the hands of validators who sold the majority of the tokens. Chambers noted:
“The Ethereum Foundation claims that the merge will not impact the price of Ethereum, but the Merge will cause a fundamental shift in the way that new tokens are distributed and this will have a dramatic effect on the price of both Ethereum and the entire cryptocurrency ecosystem.”
He further adds that the difficulty bomb will skyrocket the difficulty of mining on the PoW Ethereum blockchain. Eventually, the current Ethereum blockchain will be compelled to stop generating new blocks.
However, some market experts also laud Ethereum for transitioning to a more environmental-friendly platform.
The Merge Could Lessen the Use of Other Chains
Alex Svanevik, the CEO of blockchain data firm Nansen said that the Merge upgrade on Ethereum could impact other blockchains in the space. Svanevik’s comments came while speaking at the Korea Blockchain Week 2022 held in Seoul.
He said that during the last bull run, as the Ethereum blockchain faced heavy congestion, it led to a spillover effect on other Ethereum Layer-1competitors. Svanevik added that “It’ll be interesting to see to what extent these other ones can continue to have demand if a lot of it was driven by that spillover effect. You might have a lot less usage.”
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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