Ethereum is the world’s second largest cryptocurrency and it is giving bitcoin a run for its money.
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EthereumThe second largest cryptocurrency by market value, has just run a final dress rehearsal before a years-awaited upgrade, widely considered one of the most significant events in crypto history.
Since its creation nearly a decade ago, ethereum has been mined through a model known as proof-of-work. It involves complex mathematical equations that large numbers of machines race to solve, and it requires an abundant source of energy. Bitcoin extraction by a similar process.
Ethereum has been working on transitioning to a new model for network security known as proof of stake. Instead of relying on energy-intensive mining, the new method requires users to leverage their existing ether cache as a means of verifying transactions and minting tokens. It uses less energy and is expected to translate into faster transactions.
Ansgar Dietrichs, a researcher with the Ethereum Foundation, said in a tweet that the most relevant indicator for achieving success when it comes to exhaustion periods like this is looking at time to completion. He called it “another successful experiment.”
A research associate from Galaxy Digital pointed out that the post-merger engagement rate dropped and there appeared to be an issue with one of the customers – but overall, it worked.
“Merge successful = string ended,” Christine Kim wrote in a tweetadded that we’re likely to have similar kinds of issues with the mainnet upgrade, “but the bottom line is that Merge worked.”
Time of The upgrade will be discussed at the ethereum core developers meeting on Thursday. Previous instructions indicated that merging will go into effect mid-September. The final test takes place around 9:45 p.m. ET Wednesday.
Price of ether, a token that is derived from the ethereum blockchain, has rallied in the last month, up nearly 80%, including a 10% increase in the past 24 hours to around $1,875. However, it is still down by about half this year.
Ethereum’s transition has been consistently pushed back over the past few years because of major flaws in the implementation. The developers say it’s on track to take place in about a month, following Wednesday’s success.
This is what happened
One of ethereum’s testnets, aka testnets, called Goerli (named for a train station in Berlin) simulated a process similar to what the mainnet, or mainnet, would do. implemented in September.
The testnet allows developers to try new things and make necessary tweaks before the updates are deployed on the main blockchain. Wednesday night’s exercise showed that the proof-of-stake validation process significantly reduces the energy required to verify a block of transactions and also demonstrates that the merger process works.
“Goerli has this badge of a bottom-up experimental network,” Josef Je, a developer who worked with the Ethereum Foundation and now runs a permissionless peer-to-peer lending platform called PWN. Je added that it is also the most used testnet at the moment.
Je said proof of stake on Goerli would be akin to how things would run on the mainnet.
The The Ethereum Foundation blog says Goerli is “the closest network to the mainnet, which can be useful for testing smart contract interactions.”
Spot the bugs
Tim Beiko, coordinator of the developers of the ethereum protocol, told CNBC that they usually know “within minutes” whether a test has been successful. But they will still be looking for a variety of potential configuration issues in the coming hours and days so they can quickly fix them.
“We want to see the network mature and have a high engagement rate among validators and also make sure we don’t run into any unexpected bugs or issues,” Beiko said.
The easiest metric to track is engagement rate, meaning how many validators are online and performing their tasks, says Beiko. If the numbers drop, the developers will have to figure out why.
Another important issue concerns trading. Ethereum processes transactions in groups called blocks. Beiko said a clear indicator that the test will go well if the blocks have actual transactions in them and are not empty.
The final key check is whether the network is maturing, meaning more than 2/3 of the validators are online and agree with the same view on chain history. Beiko says it takes 15 minutes under normal network conditions.
“If those three things look good, then there’s a long list of extra things to check, but at that point, everything is going well,” Beiko said.
‘More accessible’
As of December 2020, the ethereum community has been testing proof-of-stake workflows on a chain called a beacon, which runs alongside an existing proof-of-work chain. Beacon solved several key problems.
Beiko said the initial proposal required validators to have 1,500 ether, a stake currently worth about $2.7 million, to use the system. The new proof-of-stake proposal lowers the payout, asking interested users to have only 32 ether, or about $57,600.
“It’s still not a trivial sum, but it’s a much more accessible system,” says Beiko.
There were other important developments leading up to Wednesday’s test. In June, ethereum’s longest-running testnet, called Ropsten, successfully merged the proof-of-work execution layer with the proof-of-stake signaling chain. This is the first dry run of the process the mainnet will go through next month, all going according to plan.
Beiko says that testing the fusion allows developers to ensure that the software running the ethereum protocol is stable and that “everything built on the network is ready for migration.”
