The Ethereum Proof-of-Stake Merge
While Ethereum 2.0 Beacon chain has been running for a while, Ethereum 2.0 development is far from complete. In order to accelerate the transition from 1.0 to 2.0 and to offer the benefits of PoS (Proof of Stake) consensus algorithms, developers propose a hard fork called the “Merge”, that will change Ethereum 1.0 consensus algorithm from PoW (proof of work) to PoS.
The hard fork is planned for Q1 2022
Evaluation Process
We are going to:
What is changing
Analyse the impact of those changes
What is changing
Transition from proof of work to proof of stake consensus mechanism
Impact Analysis
TBD
What are the regulatory implications:
Maturity / Market Capitalisation: The surviving asset’s root is ETH so the legacy carries forward
Security and Operation: There should be no impact on security theoretically but risks remain due to the experimental nature of the change
Traceability / Monitoring : The changes will not affect the addresses so the tracing will not differ
Exchange Connectivity and Demand : Deposits and Withdrawals should be disabled
Type of Distributed Ledger Technology (DLT) : Remains ETH
Innovation and Efficiency: Reduction of energy consumption and therefore transactions cost