The planned September upgrade The Merge will reduce the energy intensity of the Ethereum network, shift the asset’s issuance to a deflationary model, and ‘pave the way to a more scalable future through sharding’. Analysts at Citigroup said this, CoinDesk reports.
Experts noted that the mainnet merge with the Beacon Chain is one of the five stages of Ethereum’s planned upgrade. The Merge could increase blockchain throughput by 10% due to a reduction in block time (block time) from 13 to 12 seconds.
The upgrade also lays the groundwork for the next upgrade — Surge. The latter will enable Ethereum to process up to 100,000 transactions per second, to be achieved through the use of sharding.
.@VitalikButerin claims that #Ethereum will be able to to process «100,000 transactions per second», following the completion of 5 key phases:
• The Merge
• The Surge
• The Verge
• The Purge
• The SplurgeA quick breakdown of what each stage means for $ETH. 👇 pic.twitter.com/FnaWww8mHZ
— Miles Deutscher (@milesdeutscher) July 22, 2022
Analysts expect that the transition to the consensus algorithm Proof-of-Stake (PoS) will reduce Ethereum issuance by 4.2% per year. Citigroup stressed that this will positively affect ETH’s perception as a store of value.
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Experts explained that the switch to PoS will turn the cryptocurrency into a ‘yield-generating asset’, operating in a network with abundant cash flows. This could make the Ethereum ecosystem a backbone for most DeFi applications.
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The bank also noted that after the upgrade ETH could be considered a relatively energy-efficient and environmentally friendly digital asset. Analysts expect the network’s electricity consumption to fall by 99.95%.
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Earlier, Markus Tilén of IDEG, an asset-management firm, forecast the consolidation of Ethereum quotes after The Merge activation.
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