The unprecedented switch from a Proof-of-Work consensus mechanism to a Proof-of-Stake on the Ethereum network is delayed again.
What happened: On Tuesday, Ethereum core developer Tim Beiko confirmed via Twitter that the Merge would be delayed past its expected date of June 2022 but said that PoW is definitely in its “final chapters” on the second biggest blockchain.
- The Merge will transition Ethereum to a more secure, scalable and sustainable operation. The switch to PoS will reduce the blockchain’s environmental impact by over 99%, eliminating the need for high-powered mining computers.
- Although this is one of many delays for the Merge, developers have said that final tests before the transition have been successful. The most recent called the “shadow fork,” is essentially a dress rehearsal of the Merge.
Why it matters: The hotly anticipated Merge has DeFi and TradFi investors paying close attention because the shift in consensus mechanisms will be a big deal for the blockchain-crypto ecosystem.
- Cutting energy costs could make Ethereum more appealing to institutional investors, especially with Bitcoin taking so much heat for how energy-intensive its mining process is.
- Some experts predict that token issuance will decrease as PoS requires less work and earns a smaller financial reward. This supply cut should increase the value of ether, Ethereum’s native token. “The merge is like two halvings at once,” Matt Hougan, CIO of Bitwise Investment Management, told Business Insider.
- Staking ether can become a passive income opportunity, and yields are projected to be between 8-12%.
Big picture: Google trends reported that the search term “Ethereum Merge” peaked in popularity last month, so we will all be watching with baited breathe together until it goes live. According to Christine Kim, the Mapping Out Eth 2.0 podcast creator, there are still a few more kinks to work out, and she tweeted that developers plan to run another shadow fork test on April 22.