Ethereum Gas Consumption Reduced by 99.99% After The Merge
Ethereum’s gas consumption has dramatically decreased by 99.99% following the implementation of The Merge. This significant improvement has turned Ethereum into a more environmentally friendly platform. The Merge, which took place one year ago, marked the transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) consensus. Since then, Ethereum has experienced several advancements, including a substantial drop in gas consumption.
According to data from Glassnode Alerts, Ethereum’s daily energy consumption has decreased by 99.9% after The Merge. Additionally, the recent hype around SocialFi has not caused significant gas fee pressure on the Ethereum network. In the past, increased network activities led to rising gas fees. However, this situation has improved due to the development of Layer-2 scaling solutions, which optimize gas fees.
One possible reason for the decrease in gas usage demand is the decline in the performance of NFTs and meme trends. This trend has caused Ethereum to become deflationary, resulting in a 0.25% annual deflation rate after burning over 300,000 ETH.
Anticipating the Dencun Upgrade
After The Merge, the Ethereum community’s attention has turned to the upcoming Dencun upgrade, which is expected to be deployed by the end of 2023. The Ethereum developers discussed important aspects of the upgrade during the All Core Devs meeting held on September 15. Among these discussions, the Ethereum Improvement Proposal (EIP) EIP-4844 stood out as a key point for the next upgrade. This proposal aims to enhance the network’s security and scalability.
The ongoing development of clients such as Prysm, Besu, and Geth on Devnet-8 is part of the preparation for the Dencun upgrade. EIP-4844 introduces a new transaction format called “blob-transaction,” which facilitates gas fee optimization by enabling efficient transactions between Layer-1 and Layer-2.
Contrary to expectations, The Merge has resulted in an increased number of participants in Ethereum staking instead of enabling the withdrawal of staked ETH. As of August 31, over $20 billion worth of ETH has been staked, with Lido Finance accounting for 32.4% of all staked Ethereum. However, the dominance of Lido has raised concerns about centralization. To address this issue, the Ethereum team discussed the implementation of EIP-7514, which proposes a constant cap on the validator activation queue to mitigate centralization risks.
The Dencun upgrade aims to improve the overall efficiency of Ethereum, preparing the platform for future enhancements. One such improvement is the introduction of a new data organization method called SSZ, which will enhance Ethereum’s safety, efficiency, and performance.
The Ongoing Concern: FTX Hangover
Prior to the implementation of Dencun, there is a major concern regarding the upcoming FTX token sale. Last week, Judge John Dorsey approved the bankrupt entity’s plan to liquidate its crypto assets. FTX intends to sell billions of dollars’ worth of crypto assets without prior notice to the public.
FTX still holds a substantial amount of assets, and it appears that they are preparing to enter the market for sale. The company plans to sell its crypto assets to raise funds for creditor repayment. As of now, FTX holds $192 million worth of Ethereum, as well as other Category A cryptocurrencies such as Solana ($1,162 billion) and Bitcoin ($560 million).
Furthermore, FTX has approximately $900 million worth of Category B tokens, which have low liquidity. These include notable tokens like Serum (SRM), Blur (BLUR), Polkastarter (POLS), Maps.me (MAPS), Oxygen (OXY), and Bonfida (FIDA).
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