Merger: What it is, how it affects those who own Ethereum, and how to prepare it

Merger: What it is, how it affects those who own Ethereum, and how to prepare it

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“Merger” will take place from September 6 to 12

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EthereumThe blockchain network, which creates the second largest cryptocurrency among the cryptocurrencies with the largest market capitalization, will undergo one of the most significant evolutionary processes in the crypto world since its inception. “Merge”As it has been called, it involves reforms in how transactions are carried out, applications are created, smart contracts are issued and ETHs are generated. The goal of the changes is to make the network cheaper, more scalable and more environmentally friendly.

These transformations will take place gradually from September 6 to 20. One of the most important news is related to the adoption of the protocol Proof of Work (PoW) before Proof of Stake. “Currently, every operation on the network – let’s say, sending an amount of ether from one person to another on a job portal that pays with cryptocurrency – requires the participation and consensus of distributed nodes (computing units) that confirm. and record the transaction in the block chain using mathematical exercises and massive computing power,” explains major cryptocurrency exchange Binance.

This “form of consensus” is the one used by, for example, Bitcoin. Instead, as a “merger”, Ethereum will stop “undermines“And the “validators” responsible for registering operations will begin. Advances have shown that this system consumes less electricity – and thus reduces the carbon footprint – and is better at preventing hacking, fraud or duplication. In addition, it helps Decentralization system, a goal of particular relevance to the crypto world.

Vitalik Buterin, Founder of Ethereum and Evan Van Ness, Specialist
Vitalik Buterin, Founder of Ethereum and Evan Van Ness, Specialist

This change includes more Scalable. “The consensus protocol that Ethereum is about to adopt promises faster transactions and more flexible processes. It will be easier for the network to invite large participation of validators compared to current efforts that involve integrating more and more miners; This should reflect the growth and usage of the network,” Binance explains on its portal.

Major exchanges are expected to make announcements about how the “merger” will affect the various network products once the process begins. This is because Some of the results of the merger are unknownOr it may lead to different results.

Ethereum can be split Two different networks, something known as a “fork”. In this case, ETH (the acronym that currently defines network tokens) refers to the new chain. However, this token will have to go through a listing process that will be published on some platforms.

According to the Ethereum team, any hard fork during the merger will be unofficial. If an “unofficial” fork happens, Binance will release more details about the token distribution in a future announcement.

Some operations will stop during the "merge".
Some operations will stop during the “merge”.

After the upgrade, most likely the transaction speed will be similar to the current one. The changes will not be noticeable to the average user. Ethereum gas fees will remain the same for now, but Opens up the possibility that they will be cheaper in the future.

Instead of miners, people who stake Ethereum will help secure the network. Stakers will not be able to withdraw their Ethereum stake for six to 12 months after the “merger”.

In principle, owners and users of the Ethereum network They don’t have to do anything However, they should be aware of the suspension of some services on the network until the merger takes place.

“Binance will suspend deposits and withdrawals Tokens ETH and ERC-20 around September 6, 2022 at 2:00 p.m. (Argentina time) for the Bellatrix Consensus Layer update and September 15, 2022 at 3:00 a.m. for the Paris Execution Layer update,” they said. . They warned customers to allow enough time to make their transfers Tokens Processed to suspension.

Unless you create a new one sign Binance will then reopen ETH and ERC-20 token deposits and withdrawals “as soon as possible.” On the other hand, if you split into two opposing strings and create a new one sign Users of the platform will see the accredited sign Generated at a 1:1 ratio based on the snapshot of ETH balances prior to the Paris execution layer update.

The Ethereum network will switch to Proof of Stake
The Ethereum network will switch to Proof of Stake

“For the purpose Protect Binance users, all Tokens Whatever emerges will go through a rigorous review process to be listed, just like Binance does with any other coin or sign. Due to internal policies, Binance does not guarantee a listing,” they reported.

The trading in on the placeMargin and futures They will not be affected, although large price fluctuations are expected. Binance will suspend ETH cross and isolated margin loan requests from 3:00 on September 14, 2022 until approximately 3:00 on September 16, 2022.

Liquidation will continue under extreme price volatility. Binance reserves the right to update the suspension time for ETH cross and isolated margin loans and to change ETH loan interest rates with or without notice. In addition, users with commitments in ETH must return the token generated from the fork in case of scenario B.

Proof of work, the algorithm currently used by Bitcoin and from which Ethereum will migrate, has some disadvantages, such as electricity consumption. next time, Tokens will not be mined, but validators will be Responsible for registering transactions in the blockchain, a more decentralized system.

Source: La Nacion