{"id":508356,"date":"2023-09-18T07:57:40","date_gmt":"2023-09-18T05:57:40","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=508356"},"modified":"2023-09-18T07:58:16","modified_gmt":"2023-09-18T05:58:16","slug":"ethereums-successful-merge-could-bog-down-network","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/cryptocurrency\/508356-ethereums-successful-merge-could-bog-down-network.html","title":{"rendered":"Ethereum’s successful Merge could bog down network"},"content":{"rendered":"

One year<\/a><\/strong>\u00a0after one of the most talked about software upgrades since the\u00a0Y2K changeover<\/a><\/strong>\u00a0more than two decades ago, crypto\u2019s most important commercial highway risks becoming a victim of its own success.<\/p>\n

The revamp of the Ethereum network, which was known as the Merge, turned out to be a seamless transition to a more energy-efficient system of ordering transactions on the blockchain.<\/p>\n

One of the incentives offered to participants is the ability to earn a yield on tokens used to help the network run.<\/p>\n

Surging demand for the so-called staking feature has now raised the prospect of the network bogging itself down.<\/p>\n

As part of the staking process, the Ether tokens that underpin the network are \u201clocked up\u201d in digital wallets to help order transactions and to earn the yield.<\/p>\n

Already about 20% of all Ether in circulation, valued at about $41.5 billion, has been staked, according to data tracker Staking Rewards.<\/p>\n

If the current pace continues, that amount would balloon to 50% by May and 100% by December 2024, according to a\u00a0paper<\/a><\/strong>\u00a0whose two authors include Tim Beiko, who coordinates Ethereum developers.<\/p>\n

What\u2019s driving the demand is that staking has emerged as one of a few reliable ways to earn returns in crypto.<\/p>\n

Most token prices are still less than half the record highs reached in late 2021. Ether owners can currently earn a yield of around 4% by staking.<\/p>\n

\u201cWe all like up-only, but not when the safety of Ethereum is at stake,\u201d the paper\u2019s other author, who goes by Dapplion, said on\u00a0X<\/strong><\/a>, the social platform formally known as Twitter.<\/p>\n

The worst-case scenario is that there won\u2019t be any Ether available to actually make transactions on the network.<\/p>\n

At a minimum, it increases the strain on the part of the network used to order transactions.<\/p>\n

That\u2019s why Ethereum developers are working to slow the staking influx down.<\/p>\n

On 14 September, the developers agreed to cap the number of new validators, which operate the staking wallets, allowed to join the network every six minutes.<\/p>\n

The change will be tagged onto the next major Ethereum software upgrade later this year.<\/p>\n

With the so-called churn change, Ethereum won\u2019t reach the theoretical point of 100% of all circulating Ether being staked for several years, according to the paper.<\/p>\n

\u201cWe want to slow it down a bit to buy us some time,\u201d Matt Nelson, a product manager at Ethereum infrastructure builder Consensys, said in an interview.<\/p>\n

The respite will allow developers to figure out longer-term solutions.<\/p>\n

With staking achieving \u201cunprecedented success, beyond the original intended targets of stake rate,\u201d the paper said, developers may look at adjusting validator rewards \u201cto discourage staking past a certain point.\u201d<\/p>\n

Most people don\u2019t stake their Ether \u2014 and act as validators \u2014 directly.<\/p>\n

Instead, they give their tokens to various services, operated by the likes of Kraken, Lido and Coinbase Global Inc., which pool the tokens and share in the rewards.<\/p>\n

Lido, which issues Ether holders another token they can trade on exchanges while their coins are staked, has about a\u00a033%<\/a><\/strong>\u00a0market share, according to data service Dune.<\/p>\n

\u201cA knock-on effect is that it enshrines current staking providers,\u201d said Jim McDonald, chief technology officer at Attestant, one of the largest Ethereum staking providers.<\/p>\n

Now read: Pick n Pay gets easier Bitcoin payments with VALR and Luno<\/a><\/h2>\n","protected":false},"excerpt":{"rendered":"

One year\u00a0after one of the most talked about software upgrades since the\u00a0Y2K changeover\u00a0more than two decades ago, crypto\u2019s most important commercial highway risks becoming a victim of its own success.<\/p>\n","protected":false},"author":341034,"featured_media":457337,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_facebook_post_id":"","_sma_instagram_post_id":"","_sma_threads_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[44696],"tags":[84275,43338,42124,77372],"class_list":["post-508356","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","tag-crypto-staking","tag-ether","tag-ethereum","tag-ethereum-merge"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/508356"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341034"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=508356"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/508356\/revisions"}],"predecessor-version":[{"id":508362,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/508356\/revisions\/508362"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/457337"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=508356"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=508356"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=508356"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}