Ethereum is making progress towards its transition from a Proof-of-Work (PoW) consensus to a Proof-of-Stake consensus algorithm. In an event dubbed as “The Merge”, the current network and its decentralized application will begin operating on the latter.
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Core ETH Developer Tim Beiko recently announced the successful roll-out of a Beacon Chain, or a mainnet PoS network, for its longest-lived PoW testnet “Ropsten”. This will aid developers in launching “The Merge” on this test network. The event is set for June 8th.
If successful, Ethereum and its developers could be steadily moving to a mainnet Merge event at some point in the coming months. The Ropsten Beacon Chain must meet certain requirements before operating on a PoS consensus, as Beiko clarified:
For The Merge to happen, we now need two things on Ropsten. First, its beacon chain must activate the Bellatrix upgrade, scheduled for June 2. Then, a PoW total difficulty value, the Terminal Total Difficulty (TTD) will be chosen to trigger the transition.
In that sense, Beiko asked node validators to prepare for the upcoming PoS transition. This could be one of the largest “The Merge” milestones in recent months and could provide validators with experience about “what a post-merge node is like”.
Beacon Chain node validators will need to fulfill requirements to stay active on The Post Merge network, such as running execution clients. PoW node validators will need to run a consensus layer client.
Beiko added the following on what could be a glimpse of an Ethereum mainnet post “The Merge”:
Post-merge, validators receive the priority fees from transactions This happens on the execution layer, so those fees aren’t locked on the beacon chain. To get them, you need to set a “fee recipient” address upon starting your validator.
What Could Change On Ethereum With The Merge
This testnet will have no direct implications for Ethereum holders or users. However, ETH Ropsten miners will stop operating under the new consensus layer.
Once the mainnet completes its Merge event, ETH miners will be unable to continue operating with this cryptocurrency. This could potentially induce a short-term shock to the crypto space.
ETH is one of the most popular cryptocurrencies, and one of the best to mine. The Merge is probably the most hyped event in this cryptocurrency’s history.
This combination of ingredients, a sudden shift in the system, and a highly anticipated event could contribute to the creation of volatility around “The Merge”. In the long term, the PoS migration could be a bullish catalyzer for the price of ETH.
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At the time of writing, ETH’s price trades at $1,900 with a 3% profit in the last 24-hours. The cryptocurrency has been lagging as Bitcoin takes over the market due to an increase in uncertainty in the macro-environment.
ETH moving sideways before some minor gains on the 4-hour chart. Source: ETHUSD Tradingview