Over a year ago, the Ethereum blockchain transitioned to the Proof-of-Stake consensus mechanism, moving away from mining. This transition, known as "The Merge" and occurring in September 2022 after extensive preparation, led to significant changes in the ecosystem and discussions in the crypto community, particularly regarding decentralization and changes in the roles of miners and validators.
One of the key advantages of the transition to PoS was a substantial reduction in the blockchain's energy consumption. Data from the Cambridge Centre for Alternative Finance show a 99.9% decrease in energy usage, having a significant positive impact on the environment.
Ethereum has now become a deflationary currency: after the switch to PoS, 1,170,415.34 ETH were burned, while only 871,742.20 ETH were issued. This led to a reduction in the total amount of ether and a decrease in inflation. The Shanghai update in March 2023 allowed users to withdraw cryptocurrency from staking. Despite this, the total volume of funds invested in Ethereum staking continues to grow.
However, concerns have arisen about Ethereum's decentralization due to the concentration of transaction validation in the hands of a few major players. The switch to PoS did not lead to a significant improvement in throughput or a reduction in transaction costs, and the market did not show a significant reaction to the ETH price after "The Merge". Decentralization and throughput issues remain key for Ethereum's further development.
