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Proof-of-Stake Will Significantly Enhance Ethereum’s Sustainability
Dan Morehead, CEO of Pantera Capital, emphasizes the advantages of Ethereum, or ETH switching to a proof-of-stake, or PoS consensus method. The chief executive of the crypto-focused hedge firm Pantera explains in its most recent Blockchain Letter that one impact of the network’s impending Merge would be the termination of miner payouts, resulting in a drop in the daily issuance of new ETH from 14,600 to 1,600 tokens.
Morehead asserted that this would make the most popular smart contract platform a deflationary asset. Following The Merge, Ethereum’s daily issuance rate of 1,600 ETH, net of fees burnt, is zero. This would result in a net negative issuance of ETH after deducting validator penalties such as being sliced for misbehaving and ETH that is lost over time.
The possibility of Ethereum being a potentially deflationary asset is intriguing given the current inflationary climate. The message continues by explaining how removing proof-of-work (PoW) will make the project more environmentally friendly. With an estimated 99.95% decrease in energy consumption, switching to proof-of-stake will significantly enhance Ethereum’s sustainability from an environmental, social, and governance (ESG) standpoint.
Bellatrix Update
The move away from proof-of-work, which relies on electricity and hardware as the key costs to protect the network, will result in a 99.95% energy decrease for Ethereum. A proof-of-stake system uses cash in the form of staked tokens as the primary means of network security and uses very little power. The Ethereum Foundation just last week gave a thorough update on the schedule for the Merge. The formal transfer will take place between September 10 and September 20. The process will begin in many stages, beginning on September 6 with the Bellatrix update.
By laying the groundwork for upcoming enhancements like sharding, The Merge hopes to solve the network’s scalability problems. Following its weekend decline from over $1,850, Ethereum has been benefiting from a modest mid-week bounce. ETH’s price has increased by 8.3% during the last 48 hours to $1,701. Pantera Capital now has $4.7 billion in assets under management and takes part in 100 venture initiatives.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
