Dear Bankless Nation,
Ethereum’s Goerli testnet just evolved into a proof-of-stake chain.
It’s the last of the network’s testnets to go PoS before Ethereum itself transitions to staking in The Merge. After discussions among Ethereum core devs earlier today, September 15th-16th is now being eyed for the final mainnet upgrade.
The Merge will go down as a massive milestone in early crypto history and as a feat that bettered Ethereum in many meaningful ways. One of those ways will be the reduction of Ethereum’s energy use by over 99.9%!
In recent years, the NFT ecosystem — the bulk of which is based upon Ethereum — has dealt with mainstream criticisms over its energy consumption. Yet post-Merge the vast majority of NFTs will be green accordingly, and this is an amazing achievement worth celebrating … and even harping on.
All that said, let’s talk going green for today’s Metaversal.
-WMP
Why PoS?
To date, Ethereum has used a Bitcoin-like, proof-of-work (PoW) mining system to sustain its blockchain. But the network’s developers have planned from the very start to move to PoS, and that’s because PoS offers numerous advantages over PoW systems. In the case of Ethereum, these advantages include:
- Lower hardware costs — a cheap Raspberry Pi is enough to win new Ethereum PoS blocks, you don’t need state-of-the-art mining centers to seriously compete for creating new blocks a la Bitcoin
- Better decentralization — since it’s easier to run Ethereum PoS nodes, we can expect more of these nodes popping up over time
- Economic security — Ethereum PoS penalties makes 51% blockchain attacks vastly more costly than in PoW systems
- Drastically more energy efficient — instead of running large physical mining rigs that constantly suck energy as they compete to solve math puzzles, PoS depends on validators virtually staking capital within Ethereum itself, which vastly dematerializes the blockchain consensus process
Why does PoS matter for NFTs?
Let’s say over the next couple of decades that NFTs do become ubiquitous and that wide swathes of mainstream finance do migrate over to Ethereum-based activities.
We’ll be doing the world a big favor. Why?
Because post-Merge and with the scaling prospects of Ethereum’s layer-two (L2) rollups, imagine how digital objects (collectibles, virtual land, etc.) and digital money powered by low-energy PoS blockchains like Ethereum can increasingly eat away at many physical, energy-intensive activities like manufacturing and shipping physical merch en masse, maintaining vast physical banking networks, and so forth.
This is the “metaverse rising” reality that many people have yet to understand. Ethereum, if its economical-cultural engine potential bears out, will green-ify mainstream cultural interactions in a way that basically no other public or private infra can going forward. And the journey to that vision officially begins next month!
Imagine all of mainstream culture being powered by the energy that’s required to support ~1k Australians in the future. That’s what Ethereum and NFTs plus rollups can bring us now post-Merge, and that’s a dynamic to be applauded by anyone with their wits still about them.
Hardline NFT critics aren’t going to give up on attacking NFTs once these digital assets have gone green via the Merge, though this technical evolution will absolutely take away one of their main attack prongs. Let them call us stupid, but they can no longer call us wasteful. Our position is now that much stronger.
How to approach the Merge if you’re an NFTer
There may be a chain split coming.
That is to say, some renegades may stay behind and try to keep mining the former PoW Ethereum chain after the Merge pivots Ethereum proper to PoS forevermore.
So let’s say you’re a casual NFTer that hasn’t kept up with the news. How should you approach this event?
In my opinion, you should wait patiently for the dust to settle and not do anything — that’s what I’m going to do! Your assets — ERC20s and NFTs — will be copied over to the new PoS chain, and there’s no actions needed on your part for that to happen. Then your crypto life will go on as usual.
Yet if this split does occur in a serious way, there will be a possibility to sell your old PoW ETH and try to buy more PoS ETH. My advice? Don’t try to do this unless you’re an expert. That’s because there are replay attack scenarios where attackers can steal all your ETH funds on the new PoS chain if you try to sell your PoW ETH, so I think it’s best to avoid this vector at all costs!
Action steps
- 🔄 Check out The Merge primer on ethereum.org
- 🔀 Check out The Merge and NFTs on Metaversal
- 🎨 Read my previous primer Async Art opens to all if you haven’t yet!