Simply known as the Merge in the cryptocurrency circles, the next update of the second-biggest digital currency network in the world is just around the corner. Ethereum is expecting that the long-awaited shift in the key tech underpinnings of the same network takes place between September 10 and September 20. That is a ballpark estimate of the timeline, but one that could shift either way or simply see a delay or substantial extension.
However, the importance of the same update and its effect on the price of the ETH token, as well as the whole digital currency domain is hard to miss. With traders, esports players, and crypto enthusiasts of all kinds watching the upgrade carefully, the markets are still not showing any massive movement. The same could take place immediately after the Merge goes live, but it also takes time. In any case, the implications of the update, especially its move towards a proof-of-stake system are going to be massive for the cryptosphere either way.
There are many huge and mainly overblown expectations when it comes to the effects that the Merge will have on the ethereum network. Many flat-out believe that it will kickstart the transition to a fully working network rescinding on the proof-of-stake model. That line of thought ignores the risks and additional efforts that are necessary for the wholesale move of an asset that presently has a capitalization of nearly 200 billion USD and over 400 working decentralized applications of dapps.
These huge potential risks are the very reason why a precise process of monitoring the network conditions is crucial for anyone preparing to trade big amounts of money on the potential that the Merge begins a whole new chapter in ETH market price. Here, experts are warning that the possibility of things going wrong and the upgrade glitching in some shape or form are even more important than the potential of the Merge kickstarting a whole new crypto rally.
Massive Staked Amounts
The ethereum network has over 34 billion USD in ETH tokens locked in a range of smart contracts. An additional 5.3 billion USD is staked directly on the Beacon Chain. That stems from the fact that the network is presently using its infrastructure to offer a basis for many stablecoins, synthetic assets, NFTs, DeFi solutions, and a range of other layer-2 projects. That is in part the reason why the Merge has been postponed so far numerous times over the years.
It is also why so many experts label it the most important upgrade in the history of the ethereum network. With that in mind, it is no wonder that the developers are taking on a range of big-scale testing procedures, all with the purpose of ensuring that the actual upgrade is working as it should. These testnet implementations also saw some issues and problems, but the developers believe that they were able to locate them and resolve the same problems.
The experts from the blockchain community are pointing out that any network, even ethereum, does not reside on the ultimate way how the same structure comes to its consensus. The process of consensus-making as well as the baseline mechanism only has to be present, whatever it might be. All blockchain networks have to have their new blocks both proposed and then validated. That will need to take place on the ethereum network even after the Merge goes live.
Before that, the blocks are validated and after the upgrade, they will have to be validated as well. Failing to do so would be a catastrophic development for the network, but also its ETH token. So, it is essential that the Merge does not hamper the present level of network functionality more than it is important that it brings about any massive and radical change to its consensus mechanisms.
The new Merge consensus process, when it becomes consolidated and fully functional, will have a system that prevents attacks using embedded rules for penalties. Inside of those rules, any validators that are deliberately doing anything that is seen as misbehaving will be slashed. That means that its part of the 32 ETH stake validator will be removed. Repeated slashes will ultimately mean that the validator is going to be ejected from the network.
However, the mechanisms should also consider the option that any misbehaving activity is wrongly labeled as such. In those cases, an additional mechanism will ensure that no one is accidentally penalized. That should stop any scenario where hundreds of nodes of staking are being penalized simultaneously, creating a cascading effect that could jeopardize the whole network. But, the same mechanisms and counter-mechanisms are still an open question. In other words, the way these will behave in the actual real-work blockchain circumstances remains unclear and will remain in the same limbo until the Merge is live and active.
There are plenty of reasons why traders and investors in the blockchain network of ethereum have reasons to be optimistic. The Merge, if nothing more, shows that the ETH token and its blockchain remain at the forefront of cutting-edge tech development in this domain. Also, big changes in recent years, like the burning of tokens, showed themselves to be a great and very functional idea. That is why so many have full confidence in the new upgrade as well.
However, it is hard to debate the fact that the move to the proof-of-stake from a full proof-of-work network has never been done so far and is thus a massive risk. Overall, the market philosophy, even for the crypto trading procedures, remains that huge risks are rarely something that investors enjoy or do so for a prolonged period of time. So, the middle of September 2022 will be a trying time for the ETH community. But, like with the BTC tokens, the hope remains that in the long run, these developers on the tech side will only add to the value of their respective networks.