Breaking down Ethereum’s evolution and its impact on crypto markets Was this newsletter forwarded to you?Sign up here. |
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As of September 21, 2022 @ 21:17:21 UTC. |
Welcome to Valid Points! Last week, Ethereum made its historic shift from proof-of-work to proof-of-stake – officially abandoning the energy-intensive, miner-based system that it had previously used to process updates to its decentralized ledger. In crypto circles, the occasion of the Merge was observed like a holiday – celebrated virtually and in person at watch parties complete with music, speeches and even some special guests. The largest Merge watch party was sponsored by the Ethereum Foundation and featured talks from Ethereum co-founder Vitalik Buterin and other community leaders. It had 41,000 concurrent YouTube viewers at its peak. The fact that the Merge happened overnight in much of the world only added to the excitement for many viewers. Staying up until 3 a.m. and waiting for Ethereum to finalize its first proof-of-stake blocks felt like waiting for the ball to drop in Times Square on New Year's Eve. In both cases excitement built up to a critical moment when – in just an instant – the world flickered from one reality to another. But just as watching a crystal-studded disco ball slowly descend a pole feels a bit contrived, one couldn’t help but feel a bit underwhelmed when, after years of waiting, a successful Merge was marked by blocky, difficult-to-decipher text on a black-and-white computer terminal. At least New Year’s Eve had fireworks. The network is, however, already showing signs of change. – Sam Kessler |
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Evaluating Ethereum: 1 Week After the Merge |
The first and most obvious immediate impact of the Merge was the one that it had on the network’s energy usage. Switching from mining to staking meant ripping out precisely the component of blockchain tech that gives it a bad environmental reputation. Proof-of-stake’s lottery-based system for proposing blocks is vastly more energy efficient than its power-hungry proof-of-work predecessor. Justin Drake, a researcher at the Ethereum foundation, told CoinDesk he predicted that the Merge – by shifting the second-largest blockchain network to a more efficient mechanism – would decrease global energy use by 0.2%. This statistic has been disputed. In the short term, many Ethereum miners have found refuge on other networks, like Ethereum Classic, which continues to operate using proof-of-work. The movement of one-time Ethereum miners to these other chains has slightly damped the impact the Merge will have on decreasing overall crypto emissions. But in the long term, mining on proof-of-work blockchains is unlikely to become profitable enough for most Ethereum mining outfits to continue operating. Chandler Guo, the miner behind a controversial Ethereum proof-of-work fork (ETHW), admitted as much himself in an interview with CoinDesk’s “First Mover”: “Some people [miners] have free electricity and can [continue] to work on the [ETHW chain],” Guo said. “The other 90%, bankrupt.” Moving to Bitcoin is not really an option either because the computer chips that are best suited to mining on Ethereum (GPUs) tend to be poor at mining on Bitcoin, whose miners typically use specialized computer chips called ASICs. So while the immediate environmental impact of the Merge was blunted somewhat by the existence of other proof-of-work chains, its net-positive impact on emissions continues to look sunny. Read the full article here. |
A message from Celsius Network LLC: Celsius Network LLC, et al., are soliciting offers for the purchase of its GK8 business, a digital asset custody solution, consistent with the bidding procedures approved by the U.S. Bankruptcy Court for the Southern District of New York on September 1, 2022, No. 22-10964 (MG) [Docket No. 687]. All interested bidders should carefully read the bidding procedures and bidding procedures order. The deadline to submit final bids is September 21, 2022 at 4:00 p.m. ET. |
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The following is an overview of network activity on the Ethereum Beacon Chain over the past week. For more information about the metrics featured in this section, check out our 101 explainer on ETH metrics. |
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Disclaimer: All profits made from CoinDesk’s Eth 2.0 staking venture will be donated to a charity of the company’s choosing once transfers are enabled on the network. |
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South Korea asked Interpol to issue a “Red Notice” for Do Kwon. - WHY IT MATTERS: According to Financial Times, the authorities in South Korea asked the International Criminal Police Organization to issue a “Red Notice” for the co-founder of the now-defunct stablecoin issuer Terraform Labs. Kwon tweeted on Sept. 17 that he is not on the run and is in “full cooperation” with authorities. A Red Notice is a request to law enforcement worldwide to locate and provisionally arrest a person pending extradition, surrender or similar legal action. Read more here.
Ethereum miner Chandler Guo predicts 90% of PoW miners will go bankrupt. - WHY IT MATTERS: As a result of Ethereum's transition to a proof-of-stake system where miners are not needed to validate transactions, miners have turned to a proof-of-work fork of Ethereum to continue mining. But Chandler Guo, one of the fork’s strongest advocates, thinks only 10% of miners using PoW to mine either ETHPOW or ETC will survive, noting, “Some people [miners] have free electricity and can [continue] to work on that… the other 90%, bankrupt.” Read more here.
Wintermute lost $160 million in a hack related to its DeFi operations. - WHY IT MATTERS: The CEO of the cryptocurrency market maker, Evgeny Gaevoy, said the company remains solvent, with “twice over” $160 million remaining in equity. The company is still treating the hack as a “white hat” event and asked the hacker, who currently holds over $46 million in tokens, to get in touch. Wintermute,which was founded in 2017 and trades billions of dollars across the crypto market, is the latest in a long list of crypto companies to be stung by hacks over the past few months. Read more here.
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Valid Points incorporates information and data about CoinDesk’s own Eth 2.0 validator. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post. You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which is: 0xad7fef3b2350d220de3ae360c70d7f488926b6117e5f785a8995487c46d323ddad0f574fdcc50eeefec34ed9d2039ecb. Search for it on any Ethereum block explorer site! |
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