Meta Digest

Ethereum is Set to a Great Start of 2022, as 2021 Went Well For Them

Source: Forbes

It’s safe to say that Ethereum has had a substantial year. 

In 2021, the price of Ether soared 400%, assets locked into DeFi skyrocketed 12 times to $250 billion worth and network users paid approximately $10 billion fee during that time period.

However, the surge of network activity in 2021 saw the annual energy consumption of Ethereum soar past 100TWh, setting it on par with Kazakhstan.

One of the biggest environmental concerns with cryptocurrencies is that they contribute to global warming by consuming large amounts of energy for mining.

Nodes on a Proof-of-Work (PoW) based blockchains, such as Bitcoin or Ethereum require an immense amount of gas in order to incentivize people from around the world who store information about transactions into these blocks which helps secure them against malicious actors. 

However this requires vast resources like electricity and computer processing power; it can take up more than half your average household’s monthly bill.

The top two most popular cryptocurrencies in terms of market capitalization are the 12th largest electricity consumers globally, just behind Great Britain. 

Ethereum developers recognized early on that Proof-of-Work would not be sustainable as the network grew beyond a certain size, and so they set about to transition Ethereum with an ambitious plan for years. One such example is their Beacon chain which launched in December 2020 under the Proof-of-Stake consensus mechanism. 

The Ethos platform is growing exponentially as new users join the ecosystem. With over 276,000 validators staking more than 8.8 million worth of ETH ($33B) and are earning staking rewards in ETH2.0.

Ethereum’s transition to Proof-of-Stake is about to get even more interesting. The final step in this process will be “the merge,” where the current mainnet of Ethereum will be joined with a parallel system running on Beacon PoS technology, which has been running in parallel with the existing PoW mechanism. 

With the transition to Proof-of Stake, Ethereum is set for a major energy efficiency upgrade that will see its use drop by up to 99%.

The merge will likely happen in the first or second quarter of 2022.

Opinions expressed by Meta Digest contributors are their own.

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