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By Yuga Cohler, Software Engineer at Coinbase

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The merger is coming. The long-awaited transition of the Ethereum network’s consensus mechanism from Proof-of-Work (PoW) to Proof-of-Stake (PoS) is set to arrive this year. After the merger, the already running Beacon chain will begin validating the Ethereum mainnet blockchain through a system based on rewards and penalties (i.e. “staking”) rather than cost. associated with computational intractability (i.e. “work”). Six years in the making, the merger will be a milestone in the history of cryptocurrencies with both material and philosophical implications.

Perhaps the most heralded aspect of the merger is its resulting efficiency: Ethereum’s move to PoS will lead to a projection 99.95% reduction in energy consumption compared to PoW. This will be a welcome development at a time when energy costs are rising across the world. Of course there is legitimate counter-arguments against PoS – for example, the concentration of wealth that certain PoS designs can facilitate as well as the lack of comparable large-scale testing. Nonetheless, given the existence of a peer-to-peer blockchain network that continues to operate on PoW – namely Bitcoin – the merger makes sense as a strategic next step for Ethereum and should garner goodwill from people who care about the environment.

The essential achievement of fusion, however, is more humanistic than energy efficiency. Merging proved to be an extremely complex task with many challenges. Yet its completion will not be achieved by the saying of a central authority, but by the organic coordination of like-minded individuals. Basically, a successful merger will prove the viability of decentralization as a principle of social organization.

I have witnessed this process through my periodic attendance at the bi-weekly Ethereum All-Core Developer Meetings – a regular forum for Ethereum contributors to share their progress, present suggestions for improvement, and plan the work. What I find most remarkable about these meetings is how democratic they are. Thirty people, some anonymous, some not; most with their cameras off – coming together to drive the development of a $300 billion financial network. Anyone can propose a topic before the meeting and everyone can contribute their opinion. Discussions are substantial, generally focusing on the engineering tasks at hand, but also covering the many disciplines that underpin cryptocurrency networks – economics, mechanism design, governance, and culture.

Regularly, the founder of Ethereum, Vitalik Buterin, is present at these meetings. Despite his superlative status In the cryptocurrency community, Vitalik is treated no differently than any other core contributor: with respect and intellectual honesty, but with no particular deference to his position. Disagreements over engineering approaches are resolved in an orderly fashion, and challenging Vitalik is a no-brainer if it was better for Ethereum as a whole.

In an industry known for its influential individualistic billionaires, Vitalik’s approachable disposition is remarkable. So it makes sense that this philosophy of democratic decentralization permeates not just meetings, but every aspect of Ethereum. Financial protocols, cultural products, governance processes, and now even Ethereum’s consensus mechanism are all subject to the principle of decentralization. Progress is not achieved by the fiat of a single ruler, but by the good faith coordination of non-allied actors, none having power over another.

These ethics of Ethereum are the foundations of its credible neutrality — a property that will become increasingly valuable over time. On the one hand, traditional financial systems are increasingly vulnerable to nation states controlling them for their own interests. On the other hand, while alternative L1 blockchains may offer greater scalability, convenience, and agility, they tend not to be as decentralized in their infrastructure, leadership, and decision-making processes. Its commitment to axiomatic decentralization positions Ethereum as one of the only systems allowing the storage and transfer of value with a high level of security, but without prejudice to intent or origin. The merger will be the last alternative to the “inherent weaknesses of the trust-based model” that Satoshi Nakamoto pointed out in the Bitcoin White Papermade possible by the shared values ​​of the Ethereum ecosystem.

The moral logic of the merger is decidedly optimistic, and it should be. Teamwork, cooperation, humility, curiosity, honesty: these are values ​​that we do not intuitively attribute to capital markets, and yet these are the characteristics of Ethereum that have allowed it to progress towards one of the greatest engineering feats in fintech history. . Understanding this ethical foundation of a decentralized democracy should give us a renewed appreciation for the coming merger and guide us as we chart a course for the future of the cryptoeconomy.

This material is the property of Coinbase, Inc., its parent company and its affiliates (“Coinbase”). The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Coinbase or its employees and summarize information and articles regarding cryptocurrencies or related topics which, in the opinion of the author, might be interesting. This material is provided for informational purposes only and does not constitute (i) an offer or solicitation to offer, invest, buy or sell any interests or shares, or participate in any investing or trading, (ii) intended to provide accounting, legal or tax advice, or investment recommendations or (iii) an official statement of Coinbase. No representations or warranties are made, express or implied, with respect to the accuracy or completeness of the information or the future performance of any digital asset, financial instrument or other market or economic measure. The information is believed to be current as of the date shown on the documents. Beneficiaries should consult their advisors before making any investment decision. Coinbase may have financial interests or relationships with some of the entities and/or publications discussed or otherwise referenced in the materials. Certain links that may be provided in the materials are provided for convenience and do not imply endorsement by Coinbase or endorsement of third-party websites or their content. Coinbase, Inc. is not registered or licensed in any capacity with the US Securities and Exchange Commission or the US Commodity Futures Trading Commission.

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