Ethereum has completed a key revamp of its blockchain network, marking the crypto world's most-ambitious software upgrade to date. As a result, Ethereum's carbon consumption will decline by an estimated 99 per cent. Called the Merge, the upgrade completed in the early hours of Thursday, Ethereum co-founder Vitalik Buterin tweeted.
The change replaced power-hungry computers that were used to order transactions on the network with a more energy-efficient set-up using piles of the network's native token, Ether, placed in special, so-called staking wallets.
Such an upheaval had never been attempted in crypto before, let alone on Ethereum, home to about 3,500 active decentralised apps, ranging from exchanges to games and handling billions of dollars worth of crypto. In the works for years, the Merge doesn't change the end-user experience on the second-biggest blockchain, but it's a key stepping stone to more upgrades that will make the network faster and cheaper, and should further increase its stature and usage.
The software upgrade is called the Merge because the existing Ethereum blockchain will combine with a parallel network that's been running for almost two years to test the proof-of-stake concept. Overall, the upgrade has been under consideration for over seven years.
“This is the first step in Ethereum's big journey toward being a very mature system,” Buterin said during an online Merge viewing party — essentially a public video call where developers tracked live progress on the switch. “And there's steps left to go. We still have to scale, we have to fix privacy. To me the Merge symbolises the difference between an early stage Ethereum and the Ethereum we've always wanted.”
As it became clear the transition had worked, developers who had worked on the the project for months started congratulating each other on the call. Watched by more than 41,000 people at peak, the viewing party featured content ranging from dry technical explanations of what the Merge would entail, to the performance of a Merge-themed song. Lyrics included: “Carbon footprint is all gone. That's why we are singing the Merge song.”
The Merge also changed properties of Ether, making it more akin to yield-bearing securities. Staked Ether will generate a return, expected to be around 5.2 per cent after the Merge, according to tracker Staking Rewards. Coupled with an expected net decrease in Ether token supply soon after the update, that should make the coin more attractive to investors. Ether was down 1.2 per cent to $1,584 following the merge. The token has surged more than fivefold in 2021, outperforming Bitcoin by a wide margin, in part on optimism over the Merge. Both cryptocurrencies have struggled since hitting record highs in November, with Ether down more than 50 per cent this year.
Even though completed, the Merge could be followed by days or even weeks of hiccups, based on what happened after some prior Ethereum software updates.