Will PoS be the downfall of ETH?
Iulian Nita
Will PoS be the downfall of ETH?

In this article, we examine the recent switch to the Proof-of-Stake consensus mechanism on Ethereum’s blockchain and some of the resulting consequences.

Read on to discover what this major shift means for the network and wider community. 

Landmark Switch

Ethereum is the second largest digital asset on the market, after Bitcoin. Last month, the network completed a landmark switch from its former Proof-of-Work consensus mechanism to the new Proof-of-Stake algorithm.

Widely regarded as one of the more innovative cryptocurrencies, Ethereum’s transition has been years in the making and actually featured in the original blueprint for the Ethereum currency before it even came into existence.

However, times have changed since the conception of Ethereum and there has been much commentary on the possible positive and negative outcomes of the switch.

The driving force behind this change?

Supposedly to reduce their energy consumption. The switch is said to have reduced Etherum’s energy consumption by an astounding 99.95%. With figures like these, this change is undoubtedly a force for good, and yet the community remains divided.

PoS Validation

This switch to Proof-of-Stake is a radical change, changing the very foundation of how the Ethereum blockchain functions. Since the Merge is an infrastructure upgrade, nothing will change for users. Things like wallets, addresses and transactions will appear and work in the same way. In the new PoS system, “validators” are selected to validate transactions and are subsequently rewarded with new blocks. This all sounds promising, but this is where things start to get complicated. 

Centralized Operating Model

In order to be selected as a validator, you must stake no less than 32 ETH for a period of several years, the equivalent of over $40,000 USD. This completely transforms the network from a decentralized utopia for all to a more conventional and centralized operating model controlled by those who hold power – or in this case – thousands of dollars worth of Ethereum and longevity on the network. Monitoring of the first transactions carried out post-Merge duly showed two large validators being responsible for almost half of new ETH blocks.

Does that sound fair and balanced?

It’s hard to argue with data though, and a 99.5% reduction in energy consumption sounds almost too good to be true. Like we said, this is a first. A switch like this hasn’t been made before, and this really is a giant leap into the unknown. This means that experts are still figuring out how to accurately calculate the carbon footprint of the new staking systems and draw a real-world comparison with PoW.

Additionally, in recent years studies have shown that there are concrete ways of reducing the consumption of the Proof-of-Work mechanism, with some trials piloted on scalable versions of Bitcoin actually turning out to be more efficient than some Proof-of-Stake systems.

Repurposing ETH GPUs

And what of the GPUs previously used for mining Ethereum?

No doubt any former Ethereum miners will have immediately switched to mining other currencies, which means you could argue that in some ways no energy has really been saved at all, but has in fact been redirected.

End of an Era

We all know that with any new technological intervention comes new problems, and the next few months are bound to be a period of teething problems for Ethereum. This change has been years in the making. With all the time and effort invested, the chances of Ethereum reverting to the old way of doing things are slim.

For some people, this truly marks the end of an era, and the Merge has led them to migrate to a different coin entirely. Cryptocurrency has long been touted as the banking system of the future, and many people believe this recent switch to PoS has only taken cryptocurrencies backward, straying closer to more conventional banking institutions and outside influences. 

Sustainable Solution

At Pulsar Chain, we believe in preserving not only the consensus – but the Proof-of-Work legacy of the Ethereum network. Our solution upholds the core values of decentralization and democratization by retaining the use of the Proof-of-Work algorithm in a way that’s sustainable. 

If you’d like to find out more about our work at Pulsar Chain and how we allow miners to stay sustainably involved, simply visit our website.

Disclaimer: Readers should keep in mind that the information contained in this article does not constitute investment advice. The ideas and strategies presented should not be used to make any investment before assessing your financial situation and consulting a financial professional.

© PULSAR Chain
Terms and Conditions
Privacy Policy