Ether Merger Enters 2.0 era! Insights to Help You Understand Ether 2.0
On September 15, 2022, at around 6:42 pm UTC, Ethereum officially activated The Merge at block height 15537393.
During the live “Merge Watch Party” hosted by Ethereum Foundation, over 40,000 crypto asset participants online witnessed this historic moment along with the “POS Activated” image sent by the development team.
A few minutes later, Ethereum generated its first POS block, block 15537394。
This also marks that the Ethereum blockchain has completed the transition from Proof of Work (PoW) to Proof of Stake (PoS), and Ethereum has entered the 2.0 era.
The vision of Ethereum’s migration to POS consensus began in 2014 and is scheduled for 2016. After many twists and turns and delays, its original purpose was to reduce the huge energy consumption problem caused by the POW mechanism and ensure the sustainable development of Ethereum.
The Crypto Carbon Ratings Institute (CCRI) reports that the merger has reduced Ether’s energy use by 99.988% and CO2 emissions by 99.992%, a reduction that means the entire Ethereum will emit less CO2 than a small town in the US emits in an entire year under the POS mechanism.
This also means that Ethereum continues to run and support DeFi, NFT, DAO and meta-decentralized eco-economy worth over $100 billion while providing a great role model for decarbonization/low carbon initiatives in major industries around the world.
Merger is just the beginning of a new era, 3 concepts bring you to know Ethereum 2.0
- Beacon chain
The Beacon chain was officially launched on December 1, 2020, with one goal and one goal only: to be a blockchain with POS mechanism to provide the basis for the merger of Ether. An “empty chain” completely used to carry Ether 2.0
- Proof of Stake (POS)
Proof of Stake will be the new method of verifying blockchain blocks for Ethereum 2.0. Unlike proof of work, which requires energy (electricity), proof of stake only requires participants to lock their tokens (pledges) to become verifiers. This will completely cut out the fundamental need for mining and is the core concept of Ethereum’s energy saving and emission reduction, driving Ethereum to become a more sustainable network.
At the same time, POS is far more secure than POW. To attack the proof-of-stake network, one would have to collect 51% of all coins in circulation to carry out the attack, something that is nearly impossible to accomplish with Ether’s current market cap.
- EIP-1559 brings deflationary tokens
EIP-1559 was officially launched by Ethereum on August 5, 2021, and it changed the way Ethereum transaction fees are managed: transaction fees are mostly used for burning. This move directly led to the transformation of Ethereum from inflation to deflation after the merger.
Over the past year, EIP-1559 has prompted an average of 6,700 ETH to be burned per day, less than the 14,600 issued, so the net token supply has been increasing. After the merger, Ethereum based on the POS mechanism no longer has mining rewards, so the destruction of 6700 is greater than the issuance of 1600. The net total supply of ETH is decreasing.
1、According to statistics, after the merger, the annual supply of ETH will be reduced from 4.3% to 0.43%, a reduction of more than 90%. Generally speaking, reducing the issuance of ETH is a very bullish behavior, but it should be noted that in the short term, The ETH accumulated by absenteeism under the original POW mechanism will be sold to a certain extent, so the short-term ETH price fluctuation is a normal phenomenon.
10 Tips for Newcomers to Create Web3 Projects
Ethereum 2.0 will definitely bring more complete ecological support. If you plan to create a web3 project based on deflationary tokens based on this timing, here are my ten suggestions:
- Framework recommendations:
Set a Token supply cap and never issue additional tokens
The Token economic model must be open and transparent
The best way to unlock tokens in the pool is DAO consensus
Creat s smart contract on the blockchain
Set a deflation target and formulate a perfect deflation mechanism and firmly implement it to the target value
Establish a minimum viable community and reach a consensus on the project vision
- Logical suggestion:
Stay away from trends. If you build DeFi or NFTs just because they are hot right now, you will end up in trouble.
Token rewards are a go-to-market strategy and customer acquisition payout, not a business model
Technology and concepts go hand in hand to create products that attract users, not to impress VCs
When building a DApp, you need to think like a boss, not a user.
