Cutting out miners and converting to a proof-of-stake model means that the Ethereum network is set to increase its energy efficiency by more than 99%. For investors and institutions that have long sat on the sideline because of the energy and emissions concerns around crypto, the world’s second-largest cryptocurrency is about to offer an environmentally friendly solution. The proof-of-stake model will reward ether stakers (long-term holders of ether who allow their tokens to be used for network operations) with Ethereum Proof of Stake Model freshly minted ether should their tokens be used by the network. While staking can be done actively, it is also possible to contribute tokens to a pool that is run by another individual and be able to passively earn ether. At a time when most other investments are offering up negative yields, investing in Ethereum could offer positive real yields. If the merge was just an ethereum halving, it’d be the biggest story in crypto, and everybody would be talking about the next major bull market,” explained Hougan.
When the network migrates over, it will cut rewards for new blocks drastically (by about 90%, IntotheBlocks estimates, as reported on CoinDesk), creating an ecosystem where more ethereum is burned in gas fees than is created daily. This shortening supply results in ether becoming a deflationary asset as opposed to an inflationary one, which it was previously. “Through the merge with the proof-of-stake chain, fees previously earned by miners will pass on to being earned by those staking. Ethereum will transition from a proof-of-work model that relies on miners to a proof-of-stake model that relies on the long-term holders of ether to stake large amounts of ether to vote for the correct block validations at each creation. Those that vote on incorrect blocks will have their ether supply cut, thereby creating a robust and secure system.
High Yield Opportunities
In addition to becoming more energy efficient, the network will become faster overall when it implements sharding, by which the entire Ethereum network is broken apart into pieces, called shards, to spread https://xcritical.com/ the load across more parts. It will increase transaction speeds as well as help to resolve congestion that the Ethereum network frequently experiences as the primary home of DeFi, NFTs, and more.