Ethereum is embarking on a new journey for a more scalable, secure, and sustainable network. The network after the completion of “The Merge” and the arrival of its new consensus mechanism represents a major milestone in its multi-year journey to bring Ethereum 2.0 live.
Some experts are pondering if 2022 will be the “make or break year” for the world’s second-largest blockchain network. Also, can the highly anticipated update to its network trigger a decentralized finance [DeFi] summer for 2022?
According to Ethereum’s website, the merge is scheduled to take place this quarter [Q2 2022]. That said, feverish excitement is building online. Data from Google Trends shows interest in the topic has hit a 12-month high, and the query ” Ethereum Merge” has been searched 100 times on March 28.
Ilan Solot of Tagus Capital Multi-Strategy Fund told in an interview that “FOMO [fear of missing out] is kicking for ETH pre-merge.”
Moreover, widespread coverage of the climate benefits has also contributed. The Ethereum Foundation claimed Ethereum 2.0 will lower carbon emissions to 0.07 kilograms per transaction [roughly 17,000 times more efficient than Bitcoin], making the altcoin the clear favorite for green investors.
What is the Merge?
Ethereum will transform from a proof-of-work [POW] consensus mechanism to a new proof-of-stake [POS] method through the merge.
The blockchain now operates two parallel chains -the legacy “Mainnet” [based on POW] and the new “Beacon Chain” [POS]. Once the two merge, it will migrate to the Beacon Chain, and staking will totally replace mining as the consensus mechanism.
Ethereum merge will reverberate the DeFi world
Analyst Kjetil Hove Pettersen of Kryptovault predicted that ETH will be more volatile than Bitcoin over the course of this year. “Focusing on ETH’s price jumps in the short term may grab headlines, but the real takeaway is the merge’s effect on the broader de-fi ecosystem.”
It is to be noted that Ethereum acts as the base layer for almost 3000 decentralized apps, altcoins such as Shiba Inu to Layer2 scaling solutions like MATIC to metaverse tokens like MANA.
The network also supports numerous non-fungible token projects [NFTs ], and decentralized autonomous organizations [DAOs]. With stakes running high on the merge, the global DeFi community is hoping for a smooth transition.