The Ethereum Merge was a major event in crypto where Ethereum transitioned from proof-of-work (PoW) to a proof-of-stake (PoS) consensus algorithm. The switch is a critical update that makes the Ethereum chain far more sustainable, secure, and scalable. Instead of mining, stakers now validate transactions and earn rewards for doing so.
With PoW, Ethereum’s energy consumption was extremely high due to the intense compute resources required to run the consensus algorithm. Now that Ethereum has changed to PoS, miners no longer need to spend as much electricity to support the chain. In fact, Ethereum's energy consumption has dropped more than 99.95% since switching over to PoS, all while retaining the same functionality as before.
There are a number of ways to attack a PoW blockchain. One way is the 51% attack, where an attacker gains control of at least 51% of the total hashing power in the network. This type of attack, while expensive, is straightforward in cost and approach: the attacker obtains enough hardware (and electricity to power it) to achieve sufficient hashing power. Furthermore, the attacker can benefit from economies of scale, reducing the overall effective cost. Because the security of the network depends almost entirely on the network being sufficiently large, defensibility is weak.
On the other hand, PoS introduces a layer of crypto-economic security that makes a coordinated attack far more costly. Under PoS, validators engaging in malicious behaviors are punished by having their staked ETH slashed, or burned and lost forever. While a 51% attack is still possible on PoS blockchains, there are a couple important distinctions. Firstly, instead of obtaining 51% of the network’s total hashing power, the attacker would need 51% of the staked ETH. If they managed to obtain 51% of staked ETH, they could in theory fork the chain and make their fork the canonical one. However, secondly and more importantly, the community has the ability to mount a counter-attack. According to ethereum.org, “honest validators could decide to keep building on the minority chain and ignore the attacker’s fork while encouraging apps, exchanges, and pools to do the same. They could also decide to forcibly remove the attacker from the network and destroy their staked ETH” (ethereum.org).
Staking makes securing the network more accessible for normal people, increasing decentralization. In comparison to PoW, where miners need to use expensive GPUs, PoS validator nodes can run on normal laptops. Individuals who don’t possess the minimum 32 ETH to run a validator can join staking pools where participants can contribute ETH and earn fractions of the staking rewards.
What Comes Next?
Get ready for the “Surge, Verge, Purge, and Splurge”, says Ethereum cofounder Vitalik Buterin regarding the next series of upgrades. According to Vitalik, Ethereum is just 40% complete and preparing for the next phase.
In total, these improvements should make Ethereum leaps and bounds more user- and developer-friendly.
How Does All This Impact Frontrunner?
While Frontrunner is built on the Injective network rather than Ethereum, we are committed to helping create a healthy crypto ecosystem. Since the birth of the blockchain era, many new projects have emerged that offer innovative solutions for a wide variety of industries. In order to meet the demand of these projects, it is vital that the Ethereum network continues to make sustainability and scalability improvements. A rising tide raises all ships, and a healthy Ethereum ecosystem makes for a healthier crypto ecosystem as a whole.
Frontrunner is a decentralized sports prediction market where users can buy shares of sports propositions and trade them like they would stocks. Unlike traditional sportsbooks where users place a bet and wait, Frontrunner gives users full control over their portfolios, allowing them to dynamically buy and sell positions as the odds change. By leveraging the power of free markets and the blockchain, we create transparent markets and liquid positions to reduce counterparty risk and fundamentally change the way that people invest in their sports knowledge and beliefs.