An update on The Merge – On September 15 the network Ethereum he was finishing his transition from Proof of Work to Proof of Stake. This historic update changed many settings on the network. On the occasion of 100th anniversary of The Merge, Galaxy has released a report looking into the changes that have taken place.
The Merge: 100 days and yet many changes
On December 13, on the occasion of the 100th anniversary of the distribution of The Merge, Christine Kim published a report for the company galaxy. This describes the changes that have taken place on the Ethereum network.
We recall that on September 15, the Ethereum network definitively abandoned the Proof of Work in favor of the Proof of Stake. As a result, the miners who provided block validation and protection were replaced by validator nodes.
Title The fusionthis transition was marked by the connection of theexecution layer (the application layer of Ethereum) a consensus layer provided by lighthouse chain.
One hundred days later, the Ethereum network has changed a lot, and on many levels.
>> 10% reduction on trading fees? Register on Binance (commercial link) <
Block time down and number of blocks up
Switching to Proof of Stake has been enabled improve the predictability of block time. As a reminder, block time or block time is the time it takes to add a new block to the blockchain.
This improved predictability has given rise to another phenomenon. Indeed, this has led to a decrease in blocking time, which went from 14 seconds before The Merge to 12 seconds after. Whoever says reduction in block time means more blocks produced in a day.
“The number of confirmed blocks per day has increased significantly, from a daily average of around 6,000 blocks before the merger to over 7,000 blocks in the past 100 days. »
Reducing ETH issuance
The move to Proof of Stake also has affected the production rate of ETH. Thus, while before the merger 15,000 ETH was produced per day, the network now produces none. more than 1,800.
Furthermore, this production was offset by the mechanism of systematic reduction of part of the costs, introduced by artPEI 1559. So, ETH’s annualized inflation rate has dropped from 4 or 5% to just 0.12%.
Mev-Boost: growing adoption
Parallel to the Merger, the validators had the opportunity to fully participate and benefit from the Maximum Extractable Value (Maximum extractable value, MEV). To do this, they can use additional software called Mv Boost.
“It allows them to connect to multiple third-party relays, off-chain marketplaces where you can buy MEV-optimized pre-built blocks at auction. »
In practice, MEV premiums have remained relatively stable since the Merger – except for the days surrounding the fall of FTX. The use of Mev-Boost has exploded. Therefore, about 80% of validators have adopted Mev-Boost.
Mev-Boost: The Censorship Problem
While Mev-Boost has enabled validators to increase their revenue, this has more than just benefits. Indeed, as we have already discussed many times, a significant phenomenon of censorship has emerged from the use of Mev-Boost.
Therefore, it is estimated that approximately 57% of blocks products in the 100 days following The Merge showed a systematic censorship of Tornado Cash transactions.
Unfortunately, this phenomenon tends to grow in proportion to the adoption of Mev-Boost.
Stakeout – a profitable business
Adding earnings from SRM has generated a revenue increase for validators. The latter therefore benefit both from the proceeds of mass production, as well as from those of the MEV.
Therefore, the Merger resulted in an increase in the annualized staking return. Thereby, this went from about 4% to 6%.
Now the Ethereum network looks to the future and the implementation next March of its next hard fork: Shanghai. This will notably mark the opening of withdrawals for ETH staked on the beacon chain.
Are you passionate about The Merge and Ethereum? Don’t wait any longer to prepare for the future. Quickly register on the Binance platform. You will save 10% on trading fees by following this link (trading link).