Me: *About to share another piece of NFT news* @amuhbell: “Nooooo stop. I need a NFT break.” 🫡
But the news doesn’t stop! Appreciate you future wifey.
Let’s talk about a big complicated topic. The ETHEREUM MERGE.
If it makes you feel better, I was confused for a long time as to what the ETH Merge exactly was. To make you feel even better, I didn’t understand it until about a week ago.
Credit goes to the Bankless Newsletter for their thorough and pretty-easy-to-understand explainer on the Merge. I would put their explainer at a high school to college reading level.
My goal is to re-explain it even more simply the only way I know how. With my patented crude drawings and analogies. Let’s gooooo!
PS: If you’re already familiar with what the Merge is and why it’s important, please note that I am intentionally simplifying my explanations. You want to onboard 100 million more people to crypto? Make it easier to understand 😉
What is the Merge?
It is the process of combining two Ethereum blockchains into one.
Weird to think of right? Let’s look at an IRL example of merging.
Ahhhh…so we’re literally merging two blockchains “lanes” into one.
For most of us, this is a familiar process. However, merging a blockchain of this magnitude has never been done before.
If there is an accident when merging on the highway, it causes a lot of issues. There’s traffic, people might be late to a job interview, it might cause more accidents, everyone’s day just got a little worse.
If there is an ‘accident’ on a blockchain merge, there would be a blockchain version of those downstream effects.
That’s why the Ethereum Foundation (the team behind Ethereum) has been extensively testing this before doing the real thing.
Have you merged into a lane before? If so, merge you e-mail below or share this!
Club Ethereum - Proof of Work vs. Proof of Stake
With the Merge, Ethereum will switch from Proof of Work to Proof of Stake to validate transactions.
Let’s use another IRL example to explain this. Let’s say there’s a bouncer at a club. The bouncer has an important role at the club because they check to see who is on the guest list, who has paid, and who can be let in.
Now let’s make this picture a little more clear:
Club = Ethereum blockchain: It’s a party in here 🪩
Bouncer = Ethereum Node: They make sure the transactions are valid and take note of who’s gotten in the club.
People waiting in line = Transactions that are pending to be confirmed on the Ethereum blockchain. One they’re in, they’re confirmed on the blockchain. Eg: “This jpeg is mine!”
Now here’s the issue with this bouncer at Club Ethereum. To check the guestlist or make sure one of these people waiting in line should go into the club, they have to work. In this example:
Bouncer: Runs to the box office and asks ‘Hey, is Jane Doe on the list?’
Box office: ‘Yup!’
Bouncer: Runs back to the line ‘Hey…*gasps for air* you’re 😮💨 in…*gasp*’
Person waiting in line: ‘Thanks!’
So what the is proof of stake then? How would we make the above situation more efficient for everyone involved?
What if the bouncers had earpieces or a walkie talkie? They could stay in the same place (stake), do their job just as effectively, and less energy would be used (no running around!)
What does Proof of Stake do?
More efficient right? Well, how much more efficient?
From an energy consumption standpoint, PoS will be ~99.95% more energy efficient than Proof of Work. Pretty hard for environmentally focused folks to talk crap about ETH after the Merge.
Because PoS is able to be way more efficient without compromising security, they don’t need to “pay” the nodes as much for their work. The Merge will reduce yearly ETH issuance from 4.3% to 0.43%.
Because of this, many people in the space expect the price of ETH to rise due to a large reduction in ETH being issued to these nodes.
Why now?
The Ethereum Foundation has actually been working on the Merge for a while now. Here’s the timeline:
See? It’s a literal MERGE 🙂
Yesterday, the third and final public test merge on the Goerli testnet was successful. So now it’s onto the final boss, the real thing!
If successful, this will be a huge milestone for Crypto as a whole.
Blackrock
Not quite a foe or challenger, but on top of partnering with Coinbase (announced earlier this week)…
Why does this matter?
Some deep pockets are coming to play in the crypto sandbox soon.
Spotify
I came across a Tweet yesterday evening from a someone with a sharp pair of eyes…or maybe they just really like Disclosure.
adrienstern.eth | hiring @r3vl_xyz @AdrienStern
No official announcements, no fanfare that I’ve seen besides this tweet.
Interesting…
See you tomorrow!