This is how Ethereum, the second most popular blockchain, will continue to change

Ethereum is one of the most popular blockchain-based open source software platforms. Their goal is to combine bits of Bitcoin with other things on the Internet . With all this, we speak of a decentralized internet where users can run code and create applications. But is it really so?

According to José Trajtenberg, CEO of Xcapit -non-custodial, multi-blockchain and open source wallet-, “Ethereum is decentralized and its value lies precisely in how fragmented its nodes are,  which allows reliability for the network user . The most reliable network by installed capacity it is Bitcoin , but despite this, its POW (Proof of Work) configuration does not allow its scalability towards transactionality For this reason Ethereum made decisions about making it a more scalable network, even decentralized and secure , allow the inclusion of the entire population”.

But what changes can we expect with The Merge? “We can expect the reduction of transactional costs that allow its massive adoption , for all those who still doubted it because of the gas values. Also, a more sustainable and sustainable network in terms of how it is mined, how they are validated and transactions proceed, which alludes to taking the environment into account as well.There are still many changes that remain to be seen, and the impact is still not fully in sight, as the role of network miners remains a huge unknown, and we will have to see how it evolves,” said Trajtenberg.

The CFO of Let’sBit -one of the most important crypto-exchanges in LatAm focused on offering quality financial services-, Santos Barrio, stated that Ethereum is one of the two truly decentralized networks in the world, where there are no entities or capable people to censor them or definitively influence their destiny, not even their founders .ADVERTISING

“Although there are corporations with interests in Ethereum, as in any project of its size, none have the capacity to control the network, which is effectively governed by thousands of autonomous nodes around the world. A sample of the strength of Ethereum as a project is precisely The Merge, which was a success despite financially damaging the interests of large miners, pools and chip producers around the world ,” added Barrio.

” The Merge makes Ethereum more scalable and sustainable. Scalable thanks to Sharding, a solution that allows Ethereum to store and access information in a more efficient way (via shard chains) by improving its transaction verification process. And sustainable given that the new consensus mechanism, proof of stake does not require the consumption of energy in computers that process transactions (miners) which reduces energy consumption by more than 90% The Merge is one of the most anticipated events in crypto history. It was delayed several times, to the point that many players believed it would never happen or that its launch would be a technical failure.The success of The Merge allows us to enter a new stage of blockchain development“Barrio pointed out.

Is Ethereum really a decentralized initiative or is it mostly run by large corporations? According to Leo Elduayén, CEO of Koibanx -a leading company in financial tokenization using blockchain technology-, “ETH went from being Proof of work (Proof of work) to Proof of stake (proof of participation). The decentralization of PoW is measured through the computing power, this means that the more distributed computing power is, the more secure it is. As ETH has now become PoS, decentralization is measured through the distribution of staked tokens.”

“Today, the distribution of staking tokens is quite centralized. Keep in mind that if the three main blockchain stakers agree to attack this protocol, it is probably in jeopardy (although they have no incentive to do it), just as would happen if major miners (in a proof-of-work scenario) did,” he explained.

He continued: “At this stage, where the migration has just happened, many big players (centralized exchanges like Coinbase, Kraken, etc) offered an easy and fast way for many users to participate in early staking. This is one of the main reasons why these staking pools present a higher concentration today.It is expected that as time passes the concentration of these pools will go down, returning to the levels of centralization/decentralization that Ethereum used to have when it worked under the PoW protocol.”

“I don’t see a big difference in the type of protocol in terms of centralization or decentralization. In short, there will always be a no lesser percentage (20-50% depending on the protocol) that will continue to be concentrated beyond the consensus mechanism that the use yourself,” he added. For Elduayén, some of the most important changes that will happen with the Merge are:

• Blockchain more ecofriendly: the use of resources will decrease since there will no longer be more miners competing to validate each block.
• Deflationary Supply: Today between 1,000 and 1,600 ETH are burned, for which annual inflation is projected between 0% and -2% (which would be deflation).
• There will probably be an increase in Txs (Transactions per second).

WRONG CONCEPT

Sandeep Nailwal, Managing Partner at Symbolic Capital and co-founder of Polygon – the decentralized Ethereum scaling platform that allows developers to build scalable and easy-to-use dApps with low transaction fees without sacrificing security – shared an interesting perspective: “A One misconception about The Merge is that it is going to reduce gas fees on Ethereum This is not the case: it will reduce the carbon footprint of the network by almost 100%, but it will not eliminate the high gas fees that have been a big problem for the ecosystem. The Ethereum network’s high gas fees and slow speed will continue to create high barriers to entry.”

According to Baek Kim, a partner at Hashed, “Ethereum’s move to a PoS mechanism fundamentally changes the power dynamics in the crypto industry.”

DECENTRALIZED OR NOT?

For Ulises Alzogaray, country manager of Bitwage -the pioneer platform for payment of fees in cryptocurrencies most chosen by workers, freelancers and service exporters- in Argentina, “Ethereum is a decentralized initiative, although not 100%”.

“There are some centralizing factors that call into question this quality that many Ethereum enthusiasts ascribe to it, and the merge has only aggravated that centralization. The only 100% decentralized crypto initiative is Bitcoin,” he clarified.

“With the Merge, Ethereum, after a long wait, has put its validator nodes to work, leaving proof-of-work mining behind. However, this change is accompanied by some problems that can affect the network, such as centralization. As Proof of this is the case of staking pool platforms, which represent a large percentage of total staking and concentrate enormous power over Ethereum Currently, Kraken, Lido, Coinbase and Binance have more than 60% of everything. staking,” he said.

THE DEBATE

Martín González, CEO and co-founder of BAG -a blockchain technology company that offers tools specially designed for art and culture- also spoke about Ethereum and the debate about decentralization.

“In order to be a validator in ETH, you must have 32 ETH, more than 40 thousand dollars at today’s prices. That concentrates the number of possible validators. For anyone with less than 32 ETH to validate, they have to participate in a pool like Lido. These pools together with large exchanges (Binance, Coinbase), strongly concentrate validators (7 validators concentrate more than 2 3 ). Is this centralized? Can they censor? These are interesting debates,” he argued.

Later he maintained: “In my opinion it is an edge to which he pays a lot of attention. Above all because of the power to censor or not, according to regulations that exist and above all that will come.”

“The Merge was a change in the consensus protocol from Proof of Work to Proof of Stake, now the blocks instead of being mined are minted by the validators. The first radical change is the energy consumption, with a reduction of 99, 95%.The Merge reduced GLOBAL energy consumption by 0.2%, a lot.For the user there are no changes in the interface nor in the smart contracts, the network changed the consensus protocol but the user does not notice the difference. As for gas, the Merge does not have the function of reducing it, but we will have to wait for sharding, which is expected to be in production in the coming years. The Merge also changed the rate of ETH issuance and at times it became deflationary,” he asserted.

“It took many years of work by a lot of people and the results were amazing. The network is working as planned and expectations for what’s to come (The Surge, The Verge, The Purge and The Splurge) are high. Security challenges, decentralization and, above all, censorship (cases such as Tornado Cash and USDC) are the ones that need to be paid the most attention. How regulation plays, especially in the USA (security or not?) will be essential for the course of Ethereum,” he concluded.