The Ethereum network will receive an upgrade effective this December 9th. Named the Arrow Glacier, this upgrade pushes back the ‘difficulty bomb’ which would have potentially seen the slow down or entire closure of ETH mining on the platform.
Once fully implemented, the new upgrade heralds the shift of the ETH network from the Proof of Work model the to Proof of Stake model. Rather than validate transactions through solving complex mathematical puzzles, the new Proof Stake model will require miners and users to validate transactions based on the size of their holdings instead. The upgrade does not however affect investors or their holdings.
The shift to Proof of Stake will also see a more environmentally sustainable ETH network, as the need for miners on the platform is drastically reduced, if not entirely eliminated. The independence from miners then means that the platform’s energy needs reduce by a wide margin, given how energy-intensive ETH mining rigs are.
With the Proof of Stake model, it is not a requirement that miners compete to complete the same mathematical puzzle. This saves the network the need for specialized energy-intensive computer hardware.
Once fully rolled out, ETH2 will be more scalable, sustainable, and secure in the long run. The shift also reduces the efficacy of mining as a revenue-generating activity by nearly 20-35%.
At present, the ‘difficulty bomb’ is postponed to June, as developers work non-stop to help transition ETH mining from a Proof of Work Model to the proof of Stake Model.
This move will be a net positive for the ETH platform, as Proof of Stake uses 99% fewer energy requirements than the Proof of Work Model, reducing the impact of ETH on the environment by well over 99%.
Recently, the ETH network has become nearly prohibitively expensive to use because of gas fees. Any immediate steps developers will be looking to take will also likely involve some form of lowering the gas fees while maintaining, if not enhancing, the level of security on the network.
The jump to ETH2 is set to happen in incremental steps, with the final part of the shift possibly still quite far away. In the meantime, the price of ETH is expected to keep rising, with the shift likely to positively impact ETH prices by a wide margin.
Taking into account the extent of changes that the upgrade introduces, it would not be surprising if disgruntled miners leave the network or attempt to start a competing network.