Ethereum: This Merge aftermath may put ETH in a fix
It has been a little more than two weeks since the world’s second largest cryptocurrency Ethereum [ETH] went through a landmark alteration. ETH managed to switch from the energy intensive proof-of-work (PoW) consensus model to the eco-friendly proof-of-stake (PoS) model, in what came to be known as the Merge
In simple words, this Merge effectively rendered all ETH mining obsolete, and ushered in the era of ETH staking. This worked out out in the interest of the network by making it more secure and sustainable.
A little about ETH staking
Ethereum staking is basically becoming a validator for the network. This however, comes at a price, a steep one at that. A deposit of 32 ETH or roughly $41,000 is required to become a validator. This prerequisite thins out a herd of possible stakers.
According to Ethereum’s website,
“As a validator you’ll be responsible for storing data, processing transactions, and adding new blocks to the blockchain. This will keep Ethereum secure for everyone and earn you new ETH in the process.”
Staking not for everyone?
Those who were involved with mining ETH, felt the heat in the consensus model. Reddit Community members on the official Ethereum subreddit, consisting of more than 1.5 million builders, pointed out the shortcomings of the Merge.
One member pointed out to the hard work that goes behind the set-up for staking, admitting that the new staking version “is not for everyone yet”.
Bandwidth consumption was another issue that was brought up in this discussion. Validators from the United States pointed out that the bandwidth usage had gone up thanks to Ethereum staking setups. Furthermore, some subreddit users also stated that the increased spending on bandwidth was eating into the profit made from staking.
Most community members agreed with the fact that it would require a tech savvy person to get started with staking ETH. Users were quick to compare staking to mining, which was comparatively simpler given that a software does all the hard work if the right equipment is available.
Additionally, some subreddit users did encourage all those who found the staking model too difficult, to hold out for more user-friendly ways to participate in the staking process.
Looking at the future
The aforementioned issues could cause a bunch of validators to move towards the hard-forked version of ETH, ETHW. Furthermore, a number of exchanges including Binance have extended their support to ETHW. These exchanges have also rolled out ETHW centric mining pools, making validator migration a very real possibility.
Furthermore, as per data from on-chain analytics platform Santiment development activity on the Ethereum network has gone down after 15 September. Could this be a sign of individuals losing interest in the blockchain? Only time will tell.