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The Ethereum Merge is live – what comes next?

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Here's what the new Ethereum (ETH) looks like and what the next big upgrade involves.

Years of hard work have finally paid off. The Merge is live and Ethereum now operates under a proof-of-stake (PoS) consensus.

The upgrade means that energy-intensive mining is no longer possible on the Ethereum mainnet, leading to an estimated 99.95% drop in energy consumption.

Ethereum's move towards a greener future is an enormous step in the right direction for the crypto community. Large businesses and corporations will now be able to get involved in the Ethereum ecosystem while adhering to environmentally sustainable guidelines.

You might think this is a good time for the development team to celebrate its achievements and take a well-deserved break, but apparently not.

The Merge is just 1 box ticked off in a multi-stage Ethereum upgrade. Sights are set on subsequent advancements.

Scalability

The new and improved Ethereum is secured through hundreds of thousands of nodes that act as network validators via on-chain staking. If validators achieve consensus, blocks are added to the chain.

While this is great for decentralisation and security, ETH still lacks scalability and speed. The entire blockchain history needs to be read and approved by validators. As the blockchain history inevitably grows, it will take up more memory, causing a congested network and increasing transaction approval times.

As it stands, the Ethereum network can only handle around 10 transactions per second (TPS). It's a far cry from traditional payment networks such as Visa, which can run upwards of 10,000TPS.

If Ethereum becomes more popular and dapps continue to build upon its infrastructure, it could become over-congested and a victim of its own success.

Fortunately, Ethereum recognises this problem and has a proposed solution.

Sharding

To tackle the network's scalability problem, developers have begun work on a solution known as sharding.

Sharding partitions the blockchain and distributes these partitions or "shards" to a group of randomly selected validators. Each validator is responsible for verifying a small portion of data instead of the entire blockchain history.

If the sharding update is successful and scalability is solved, it will allow ETH to process thousands of TPS and compete with traditional payment providers.

Scalability will also lower network fees and reduce the chance of "gas wars" where wealthy users pay a premium to have their transactions prioritised.

The Ethereum development team aims to complete the scalability upgrade in 2023. Although this is unchartered territory and things don't always go to plan, don't be surprised if we're left waiting for a little longer.

Billy Endres owns cryptocurrencies as of the publishing date.

Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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