Ethereum, the blockchain network that creates the second cryptocurrency among those with the most market capitalization, will go through one of the most important evolutions in the crypto world since its existence. The “merging,” as it has been called, will include reforms in how transactions are executed, applications are created, smart contracts are issued, and ETH is created. The changes aim to make the network cheaper, more scalable and more environmentally friendly.
These transitions will occur in phases between September 6-20. One of the most significant developments concerns the change from PoW to Proof of Stake.
“Currently, every operation in the network—say, sending an amount of ether from one person to another in a crypto-paying job gateway—requires the sharing and consensus of distributed nodes (computing units). , which authenticates and records the transaction on the blockchain using math exercises and lots of Computational power,” explains the major cryptocurrency exchange, Binance.
This “consensus model” is the one you use, for example, Bitcoin. Instead, as of the “merger,” Ethereum will stop “mining” and start “verifiers” responsible for recording operations. TheAdvances have shown that this system consumes less electrical energy – and thus reduces carbon emissions – and is superior in terms of preventing hacking, fraud or duplication. In addition, it promotes decentralization of the system, a goal of particular interest to the crypto world.
This change will mean a more scalable network. “The consensus protocol that Ethereum is about to adopt promises faster transactions and more flexible operations. It will be easier for the network to invoke a wide participation of validators compared to the current efforts that include integrating more and more miners; this should be reflected in the network’s growth and usage,” Binance explains on its gate.
What can happen with Ethereum?
The major exchanges expect to make announcements about how the “merging” will affect the various products on the network after the process has taken place. This is because some of the consequences of a merger are unknown, or may lead to different outcomes.
Ethereum can be divided into two different networks, which is known as a “fork”. In this case, ETH (the abbreviation that currently defines network tokens) will point to the new chain. However, this code must go through the listing process to be deployed on some platforms.
According to the Ethereum team, any hard fork during the merger will be unofficial. In the event of an “unofficial” split, Binance will release more details about the token distribution in a future announcement.
After the update, it is very likely that the transaction speed will be the same as the current one. Changes will not be noticeable to the average user. The Ethereum gas fee will remain the same for now, but there is a possibility that it will be cheaper in the future.
Instead of miners, people who participate in Ethereum will help protect the network. Explorers will not be able to withdraw their Ethereums for six to 12 months after the “merger”.
How do you prepare?
In principle, the owners and users of the Ethereum network should not do anything, although they should be on the alert to suspend some services in the network until the merger takes place.
Binance will suspend deposits and withdrawals of ETH and ERC-20 tokens approximately on September 6, 2022 at 2:00 PM for the Bellatrix Consensus Layer update and on September 15, 2022 at 3:00 AM for the Paris Execution Layer update,” they reported. They warned users to allow time Enough for their token transfers to be processed before being suspended.
If no new token is generated, Binance will reopen ETH and ERC-20 deposits and withdrawals “as soon as possible.” On the other hand, if it is split into two opposing strings and a new token is generated, platform users will see the originating token approved in a 1:1 ratio according to the ETH balances prior to the update. Execution layer Paris.
To protect Binance users, all emerging tokens will go through a rigorous listing review process, just as Binance does with any other coin or token. Due to internal policy, Binance does not guarantee the listings.”they reported.
Spot, margin and futures trading will not be affected, although higher price volatility is expected. Binance will suspend requests for cross and isolated ETH margin lending from September 14, 2022 at 3:00 AM until approximately September 16, 2022 at approximately 3:00 AM
Liquidations will continue to be enabled under extreme conditions of price volatility. Binance reserves the right to update the suspension time for cross- and segregated ETH margin lending and to adjust interest rates on ETH lending, with or without notice. Additionally, users with commitments in ETH must return the token originating from the fork in the case of scenario B.
Proof of Work, the algorithm currently used by Bitcoin from which Ethereum will be migrated, has some drawbacks, such as electrical power consumption. From now on, tokens will not be mined, but there will be validators responsible for recording transactions on the blockchain, which is a more decentralized system.