• Ethereum completed its radical shift to a new, energy-efficient system for powering its network in 2022.
• The Merge resulted in a massive reduction to the network’s energy footprint, but also led to charges of decentralization.
• The Merge did not address Ethereum’s transaction costs and slow network speeds, and failed to trigger a long-hoped-for bump to the price of ether.
In 2022, Ethereum made great strides toward creating a global computer and decentralized financial system by completing its radical shift to a new, energy-efficient system for powering its network. This upgrade to the Ethereum blockchain, dubbed the Merge, replaced the blockchain’s former power structure, which was a power-hungry crypto mining system, with a new method for issuing and validating transactions on the chain. This new system, which is based on a “proof-of-stake” system, drastically reduced the network’s energy consumption and was met with great enthusiasm from the Ethereum community.
However, the Merge also raised some serious concerns about the chain’s decentralization, as the new system requires validators to “stake” ether (ETH) with the chain in order to write transactions to the ledger. This has caused some to worry that the chain is becoming too centralized. Additionally, the Merge did not address Ethereum’s relatively high transaction costs and slow network speeds, and the event failed to trigger the long-hoped-for bump to the price of ether, which has sunk more than 20% since the Merge.
In addition to the Merge, the Ethereum network was faced with a number of issues throughout the year, including concerns around censorship and record-shattering hacks on Ethereum-linked infrastructure. Despite these issues, Ethereum’s development team was able to make significant progress in its mission to create a global computer and decentralized financial system.
Ethereum’s Merge was a major milestone in the blockchain’s history, and it is clear that the chain is on its way to becoming a more efficient, secure, and decentralized platform. While the Merge was not the silver bullet that many had hoped for, it is a step in the right direction for Ethereum and for the entire blockchain industry. As the Ethereum network continues to develop and evolve, it is likely that it will become increasingly difficult to keep up with all the changes and advancements. But, Ethereum’s development team is sure to keep pushing the boundaries of what is possible in the blockchain world.