The Ethereum transition will take place this Thursday around 7:00 am French time. What will happen to users? BFM Crypto sums up.
One of the most anticipated events of the year will take place this Thursday at around 7:00 am French time, the Ethereum transition called the “Merger” at block 58,750,000,000,000,000,000,000. And the question arises: what will change for blockchain users or holders of ethers, the cryptocurrency of this blockchain?
Considering user experience in Ethereum is fundamental. While the Bitcoin blockchain allows value to be exchanged with the queen of cryptocurrencies (Bitcoin), many related applications have been developed on Ethereum. We can think of those who use smart contracts that allow traditional financial transactions (credits, loans, etc.) to be carried out without any control authority, in the so-called Decentralized Finance (DeFi). We can also mention NFTs (non-fungible tokens) which are mainly issued on this blockchain.
Changes in 2023
As a reminder, this Thursday, Ethereum will switch from proof of work to proof of stake, which will change the engine, but without significant changes (at least in the short term) for the user. Indeed, if we change the engine of a car, it will be able to continue moving thanks to the new engine, without the driver even changing his driving habits.
Until now, most observers believed that the merger would lower the gas fee, the transaction fee in Ethereum, which is currently around $3 per transaction. In May 2022, blockchain even experienced a historic peak in fees payable, averaging $200 per transaction completion. In particular, due to high fees, some users have turned to blockchains with reduced fees, such as Polygon or Solana.
The fee for executing a transaction on the Bitcoin blockchain remains lower, at around $1 per transaction as of today. This reduction in Ethereum gas fees should happen for the second time, and not in 2023 or later, during the next stage of the merger, called “Splash”. Similarly, the goal of Ethereum will be to increase the number of transactions from 20 to 100,000 per second, as desired by Vitalik Buterin. But in the near future, the number of transactions per second will not change much.
For hard forks?
For those holding the Ether, there are certain things that will need to remain vigilant tomorrow. Indeed, ahead of The Merge, centralized platforms such as Coinbase, Kraken, or even Binance have decided to block their users from withdrawing and depositing Ethereum in preparation for a possible hard fork. Binance said in a statement that a decision has been made to “reduce trading risks associated with price volatility and ensure the safety of user funds during the hard fork.”
As a reminder, a hard fork consists of splitting a blockchain into two separate chains after splitting within the developers or the community itself over a fundamental issue regarding the protocol of that blockchain. In fact, some players today don’t want to switch to Ethereum’s “proof of stake” and want to stay on “proof of work” by pushing the idea of alternative blockchains that will use the history of the old Ethereum. blockchain.
This way, if there are hard forks after The Merge, centralized platforms will be able to choose whether to support them or not, and return forked tokens to their users. Specifically for a user, if he had 1 ether on the platform, he could get another ether from the same hard fork.
As a reminder, today almost two-thirds of Ether (63%) is “staking” (i.e. deposited) through several centralized platforms (according to the calculations of the Nansen crypto data analysis platform), in particular through the Lido protocol, which concentrates 32% of Ether, Kraken (8.5%), Coinbase (7.2%) or Binance (6.7%). Some observers speak of potential governance issues after the merger.
Fraud risks with The Merge
Similarly, in the event of a blockchain hard fork, users will need to be vigilant about the risk of fraud. For example, it will be necessary to be vigilant against the “false” extensions of some digital wallets that will allow access to the forked blockchain.
“It will be presented to you as the only extension compatible with the X hard fork, and it will be enough to simply import your wallet to use it,” Au Coin du Bloc emphasizes the media. In fact, it will be a fake platform that steals all user funds.
Similarly, there is the well-known phenomenon of airdrops, which usually consists of a blockchain or cryptocurrency project giving away tokens to make itself known. Fake projects may offer users to give them funds, but in reality they will be traps for stealing cryptocurrencies.
“However, it is possible that some decentralized exchange platforms or crypto bridges allow you to claim tokens. You will still have to wait for announcements in the official media before performing any operation,” the article elaborates.
Similarly, it will be a matter of caution for users to purchase NFTs in the morning to avoid any risk of fraud when switching to a new blockchain.