For over a year now, the token space has been suffering from one of its most brutal downturns in history. Mainstream media outlets and blockchain newcomers declared crypto all but dead in 2022, and though winter endures, there are reasons to believe that the naysayers may be wrong. In fact, despite the adverse market conditions, we believe that 2022 will be remembered as a watershed year for the industry, and that’s mainly thanks to a significant technological update that launched in September: The Merge.
Widely regarded as the most important crypto event of the past few years, The Merge refers to Ethereum’s highly anticipated upgrade to Proof-of-Stake. The world’s second-biggest blockchain previously validated transactions using a Proof-of-Work mechanism akin to Bitcoin, but after The Merge shipped, Ethereum’s Proof-of-Work execution layer “merged” with its Proof-of-Stake consensus layer. Now, Ethereum relies on validators staking ETH to add new transactions to the blockchain.
But why was The Merge so important? Well, Proof-of-Stake has brought all kinds of benefits to Ethereum, including a 99.99% reduction in energy consumption and a 90% cut in ETH issuance. As the network no longer needs to issue coins to miners, ETH emissions have fallen. This could potentially turn ETH into a deflationary asset in the future due to the network’s EIP-1559 transaction fee burn. That could bode well for ETH’s price, which in turn makes the network more secure and difficult to attack.
While few would argue that these changes are beneficial to Ethereum, it’s worth thinking about the impact they could have on the broader ecosystem. For several years, Ethereum has been the world’s most used blockchain. It’s the home of decentralised finance and NFTs, two revolutionary technologies that could upend entire industries in the future. While other similar blockchains have emerged, none have caught the crypto market’s mindshare like Ethereum.
Ethereum’s move to Proof-of-Stake was particularly significant as it shows how blockchain technology can benefit the world without harming the environment in the process. In time, a Proof-of-Stake Ethereum will likely raise questions about Bitcoin’s reliance on an energy-intensive Proof-of-Work mechanism, and possibly set the stage for Ethereum to supersede its predecessor. Many crypto traders have declared that they believe in this hypothetical outcome known in crypto circles as “The Flippening,” though only time will tell if they are correct.
While we don’t yet know if Ethereum will one day top the crypto charts, its influence over the industry is undeniable. token.com’s belief in the network is so strong that we launched our mobile app in Brazil with a curated Collection of tokens dedicated to The Ethereum Ecosystem. Of all the Layer 1 blockchain ecosystems that crypto has spawned over the past few years, Ethereum’s remains the strongest and most active by some distance.
After a successful launch last year, there’s a good chance that The Merge could change crypto forever once the storm passes. Due to the negative events that impacted the token space in 2022, few people are aware of Ethereum’s landmark event, but we believe that will change soon. The world’s most widely used blockchain network successfully activated its most significant upgrade in history. Though market prices suffered, it’s hard to see how 2022 will be remembered as anything other than a pivotal year for the industry.
Mel Gelderman, CEO of token.com
Read more via CoinTelegraph here.
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