Bad news for Ethereum (ETH), forced to delay its highly anticipated update to summer 2022

After a few weeks of speculation, Ethereum lead developer Tim Beiko confirmed in a tweet on Tuesday that the long-awaited Ethereum merger will come later than expected. Instead of June, Beiko said the network’s transition to the proof of stake (proof of stack or PoS) is more likely to occur “within a few months”.

Beiko insisted that Ethereum was “in the final chapter of PoW“, but it’s yet another in a long series of delays for a project that was supposed to be completed as soon as 2019 .

The update comes after Ethereum hit a major milestone on Monday with the first shade fork of the Ethereum mainnet, which amounts to a dry run of the network’s upcoming change in consensus mechanisms.

However, according to a Tweeter Ethereum DevOps Engineer Last Weekend Parathi Jayanathithree recent phantom forks of Ethereum’s Goerli testnet revealed bugs that still need to be ironed out before the update is ready.

The merger signifies Ethereum’s move to a proof-of-stake (PoS) mechanism to secure itself. Today, the network relies on a resource-intensive proof-of-work (PoW) system similar to that of Bitcoin, in which a decentralized network of computers competes to validate transactions.

Ethereum’s move to PoS, where users retain the ability to secure the network by “staking” ether, is expected to reduce energy costss of the network by 99% and facilitate the scaling of Ethereum.

However, building a new consensus mechanism for Ethereum comes with significant complexity. In addition to introducing a host of engineering challenges, Ethereum’s PoS model will add a new set of game-theoretic mechanisms to ensure that network validators act in good faith.

With billions of dollars at stake, one misstep would be catastrophic for the entire ecosystem.

Move focus to layer 2

Even after the merger, Ethereum’s high gas fees and relatively slow speeds – which made the network unusable for many applications – are likely to persist.

Ethereum is at the center of decentralized finance (DeFi), GameFi, and NFTs, but a slew of newer POS chains are nipping at Ethereum’s heels by offering users faster and cheaper transactions.

The merger supplanted Ethereum’s original plans for “Ethereum 2.0,” which included adding sharding to improve network throughput by breaking up activity into chunks that can be processed concurrently. Sharding is still on the Ethereum roadmap, but it was pushed back to 2023 in order to speed up the move to PoS.

With that in mind, much of the attention within the Ethereum developer community has turned to Layer 2 rollups like Arbitrum, Optimism, and Loopring, which have amassed billions of dollars in total value locked to their solutions. third parties to scale the Ethereum network.

Even after the merger, an increasing portion of network activity is expected to shift to these Layer 2 networks, which process transactions on separate blockchains before aggregating and forwarding them to the Ethereum base layer.

While Layer 2 solutions each have unique advantages and disadvantages over Ethereum, they tend to be much faster and cheaper than the base layer while still containing essential security safeguards.

Ethereum’s native token, ether (ETH) is the second largest cryptocurrency. At press time, it had a market cap of $365 billion and was trading at $3,100, up from around $3,500 at the start of the month.

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