The Merge is getting closer: Can the Ethereum 2.0 opponents succeed?

    14 Aug 2022
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    Ethereum token’s price rises as it is moving closer to long-awaited the Merge upgrade. Meanwhile, part of the community led by the prominent miner intends to resist the upcoming shift to ETH 2.0 and create a new, parallel network and cryptocurrency ETHW to preserve the existing Proof-of-Work method and ETH mining. However, Ethereum co-founder Vitalik Buterin seems not much worried about this.

    Ether, the world’s second-biggest cryptocurrency, soared to a two-month high after developers successfully completed a final dress rehearsal for the Merge – a pivotal upgrade of the Ethereum blockchain expected to happen in mid-September.

    The merge of Goerli, the last of three public testnets, has been successfully completed before the Ethereum blockchain makes its long-awaited move from Proof-of-Work (PoW) to Proof-of-Stake (PoS). Testnets allow developers to experiment and make necessary adjustments before updates launch on the main blockchain. After this, the mainnet Merge is expected to occur on September 15, as Ethereum core developers discussed during the recent conference call.

    The Merge ahead

    The Merge aims to solve many of the core problems the industry faces today with security, scalability, and environmental sustainability being the three core issues.

    Proof-of-Work consensus mechanisms depend on crypto miners to verify transactions, while Proof-of-Stake networks require validators to hold a certain amount of tokens to participate, making them much less energy-intensive.

    As a result, the upgrade is expected to speed up transactions on the Ethereum network and make it more energy-efficient, with backers hoping it will address criticisms over the environmental impact of cryptocurrencies. That has led some investors to bet Ether may eventually end up stealing Bitcoin’s fame. Bitcoin has lost some ground to other tokens in recent years, with its market dominance slipping below 40% from almost 70% at the beginning of 2020.

    Riot of miners

    However, not everyone is happy about the upcoming shift to Ethereum 2.0. The Merge will leave the large Ethereum mining community with their expensive machinery to search for new uses.

    Prominent Chinese Ethereum miner Chandler Guo launched a campaign two weeks ago to draw opposition to the transition to Ethereum 2.0 and Proof-of-Stake consensus. Guo plans to hard fork the Ethereum network and create a spinoff, Proof-of-Work version of the Ethereum network called ETHW.

    Since then, the idea has begun to gain momentum. But what is the crypto community’s response?

    Supporters and opponents

    Circle and Tether, the issuers of the USDC and USDT stablecoins, announced that they would exclusively support Proof-of-Stake Ethereum following the Merge. However, for exchanges in the business of making relevant assets available for trading, the Proof-of-Work Ethereum plans present a potentially lucrative opportunity. The Poloniex, backed by TRON founder Justin Sun, said it would support two potential hardfork tokens, but so far, none of the major exchanges has committed to listing any new tokens.

    Meanwhile, Binance said in a Wednesday blog post it was “closely monitoring” the Merge and would support it on launch. The exchange noted that the event could potentially lead to the creation of some forked Ethereum tokens, adding that it would “evaluate the support for distribution and withdrawal of the forked tokens.” To put it simply, Binance has hinted that it will support the PoS version of ETH as the crucial update ships, but it hasn’t ruled out listing other ETH-forked tokens.

    Vitalik is calm

    Experts on the subject are non-convinced yet that any Ethereum hardfork proponents are capable turn that provocative concept into a reality.

    “This public support for ETHW is harmful to the Ethereum ecosystem,” Daniel Hwang, head of protocols at Stakefish, a leading staking pool, told Decrypt. “It is damaging to further fracture and complicate the ecosystem. I find it alarming that some of us are ignoring the very clear weight large infrastructure providers can have,” he said while emphasizing that he spoke only for himself and not on behalf of his company. “The ecosystem listens to these leaders.”

    On the other hand, Ethereum co-founder Vitalik Buterin played down the impact of any hard forks after the Merge event. Speaking at the developer event ETH Seoul, Buterin said, “I don’t expect Ethereum to really be significantly harmed by another fork.”

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