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Ethereum has just completed its first major dress rehearsal for a long-awaited makeover that will be its most significant overhaul since the digital currency launched nearly a decade ago.
Cryptocurrencies such as ethereum and bitcoin are often criticized for the mining process to generate new coins. Both currently use a so-called proof-of-work mining model, involving complex mathematical equations that a huge number of machines strive to solve.
Ethereum has worked to move from the energy-intensive proof-of-work method of securing the network to a proof-of-stake model, which forces users to leverage their existing ether cache as a way to verify transactions and create new tokens. . This requires much less energy than mining and will result in faster transactions.
The transition has been pushed back several times over the past few years due to major flaws in the implementations.
The developers told CNBC that the latest test on Wednesday went smoothly, an important marker as the second-largest cryptocurrency’s blockchain prepares for its historic move.
Here is what happened. Ethereum’s oldest testnet (testnet, for short) has simulated a process identical to what the mainnet (or mainnet) will run this fall. Testnets allow developers to try out new things before they are deployed to the main blockchain, giving them time to make necessary changes.
Wednesday’s exercise showed that the proof-of-stake validation process significantly reduces the energy needed to verify a block of transactions, and also proved that the merge process works.
“There was no crazy bug that happened,” said Auston Bunsen, co-founder of QuikNode, which provides blockchain infrastructure for developers and enterprises. “Everything went as smoothly as possible.”
Ethereum Protocol Developer Coordinator Tim Beiko agreed and added that the network is now stable. However, he noted that the test encountered “a few minor known issues” and that the developers “will be spending the next few days sorting them out before discussing next steps on the AllCoreDevs call this Friday.”
The price of Ether, the native token of the Ethereum blockchain, has lost around half of its value this year and is trading at just over $1,800.
Work on bugs
Since December 2020, the Ethereum community has been testing the proof-of-stake workflow on a chain called a beacon. The beacon chain works alongside the existing proof-of-work chain and already has human validators processing new blocks.
Beacon addresses issues that have arisen from previous efforts to effect the change, according to Beiko.
“We knew there would be a lot of technical work to fix issues like the increased centralization we see in other proof-of-stake systems,” Beiko told CNBC. “We achieved this with the beacon chain.”
Beiko told CNBC that the original proposal required validators to have 1,500 ether, a stake worth around $2.7 million, in order to use the system. To lower the barrier to entry, the new proof-of-stake proposal would require interested users to have only 32 ethers, or roughly $57,600.
“It’s still not a trivial sum, but it’s a much more accessible system,” Beiko said.
The developers simulated the merge with testnets to pressure test the workflow and code. On Wednesday, Ethereum’s oldest testnet, known as Ropsten (which closely mirrors the mainnet), successfully merged its proof-of-work execution layer with the proof-of-stake beacon chain. This was the first dry run of the process the mainnet will undergo later this fall, all should go according to plan.
Beiko said testing the merge allows developers to ensure software running the Ethereum protocol is stable and “everything built on top of the network is ready for the transition.”
Bunsen said that before Wednesday, the beacon chain wasn’t doing much.
“It was just about hanging around, creating, for lack of a better term, empty blocks,” he said.
He called Wednesday’s trial a “smooth instant rollout” and said, “I can see it happening the same way for the mainnet.”
More dry trials are expected to happen on testnets called Goerli and Sepolia, giving developers additional opportunities to see what could go wrong before the official show.
“With each testnet, we expect the code to be closer to what will be used on the Ethereum mainnet,” Beiko said. “We’re looking for less friction each time. Hopefully the minor issues we saw today will be resolved when the next testnet is upgraded.”
Still, Beiko encourages enthusiasts to tread carefully.
“Users should be aware that transitioning Ethereum to proof-of-stake does not require any action on their part unless they are a validator on the network,” he said. “The transition will also not create ‘new’ Ethereum tokens.”
Beiko encouraged users to watch out for scams and refer to the Ethereum blog for announcements.
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