Scheduled for September, The Merge update will reduce the energy intensity of the Ethereum network, transfer the asset's issuance to a deflationary model, and “pave the way for a more scalable future through sharding.” This was stated by Citigroup analysts, CoinDesk reports.
Specialists recalled that the merger of the main cryptocurrency network with Beacon Chain is one of the five stages of the planned Ethereum modernization. The Merge can increase blockchain throughput by 10% by reducing block time from 13 seconds to 12 seconds.
The update also lays the groundwork for the next upgrade, Surge. The latter will allow Ethereum to process up to 100,000 transactions per second. The effect is planned to be achieved through the use of sharding technology.
• The Merge
• The Surge
• The Verge
• The Purge
• The Splurge
— Miles Deutscher (@milesdeutscher) July 22, 2022
By According to analysts, the transition to the Proof-of-Stake (PoS) consensus algorithm will lead to a reduction in the volume of Ethereum emission by 4.2% per year. Citigroup stressed that this will positively affect the perception of ETH as a store of value.
Specialists explained that the transition to PoS will turn cryptocurrency into a “profitable asset” that operates on a network with an abundance of cash flows. This will allow the Ethereum ecosystem to become the base for most DeFi applications.
The bank also noted that after the upgrade, ETH can be viewed as a relatively energy-efficient and environmentally friendly digital asset. Analysts expect that electricity consumption by the network will decrease by 99.95%.
Recall that Markus Thielen from the management company IDEG predicted the consolidation of Ethereum quotes after The Merge was activated.