Ethereum Plunges 99.9% – Great PoS News


Reduced energy consumption – On September 15, Ethereum finalized its transition from Proof of Work to Proof of Stake. This update affected at different levels, in particular for the energy consumption of the network which has been drastically scaled down.

Ethereum consumption reduced by 99.9%

As we just saw, The Merge update moved Ethereum from Proof of Work to Proof of Stake.

Consequently, the miners were replaced by validator nodes. Excellent news for the energy aspect of the network. Indeed, miners must spend significant amounts of energy to validate the blocks. Conversely, validator nodes are extremely economical in energy.

Following this transition, the energy consumption of the Ethereum network has dropped 99.9%. At its peak, the network consumed nearly 94 TWh per year. Since switching to Proof of Stake, the network now consumes an average of 0.01 TWh per year.

Evolution of Ethereum energy consumption – Source: Digiconomist

Obviously, the energy cost of each transaction has also been drastically reduced. Indeed, an Ethereum transaction consumes on average 0.03kWh and has a carbon impact equivalent to 44 VISA transactions or 3 hours of video on YouTube.

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Ethereum: all metrics green

In parallel with the electricity consumption of the network, the transition to Proof of Stake has had other impacts.

Initially, this led to a unexpected decrease in block time. Currently, Ethereum produces a new block every 12 seconds instead of 13. A small difference, but which allows, at the end of the day, the network to produce approximately 1,000 more blocks each day.

Additionally, the rollout of The Merge changed the way ETH was issued. Indeed, the transition to Proof of Stake has generated a decrease in ETH issuance by 99%. This decrease has, in itself, an interesting impact. Indeed, coupled with the destruction of ETH introduced by EIP 1559, the reduction in issuance generates a deflation on ETH. However, at present, this voluntary and gradual scarcity of Ethereum has not had any significant impact on the price of the crypto-asset in question.

As a reminder, EIP 1559 introduced a mechanism for the systematic destruction of part of the transaction fees. Thus, coupled with the emission reduction, these two elements make the network deflationary, with approximately -0.07% monetary issuewith current market conditions.

the switch to Proof of Stake led to a decrease in ETH issuance by 99%, which made Ethereum deflationary
Prediction on the annual issuance of ETH under current conditions – Source: ultrasound.money

Unfortunately, all is not rosy for the network. Indeed, the transition to Proof of Stake also spawned a censorship issue on Ethereum. In fact, a majority of block producers end up censoring transactions to Tornado Cash.

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