In the wee hours of the night on September 15, 2022, the Ethereum network, where a majority of NFTs run, is expected to undergo a major change, as the current Ethereum Mainnet merges with its new consensus layer, the Beacon Chain. Below we will explain what this means and why brands and those working on their behalf should care.
WHAT IS HAPPENING?
- Ethereum is currently secured by a proof-of-work consensus mechanism. This essentially means that the blockchain is maintained by a decentralized network of powerful computers that validate transactions and add blocks to the chain by racing to solve cryptographic equations. This process requires each of these computers to expend significant computing energy, which has raised environmental concerns, and caused many brands and consumers to avoid NFT projects altogether.
- Tonight, Ethereum will change how it works, moving away from this proof-of-work model to a proof-of-stake consensus mechanism. Basically, the network will now be secured not by those performing intensive computing “work,” but instead by those who have the most ETH staked on the network.
HOW IS THIS RELEVANT TO THE ADVERTISING INDUSTRY?
- Ethereum claims that its move to proof-of-stake will reduce its energy consumption by ~99.95%, and that the energy used for Ethereum transactions going forward will be equivalent to watching 20 minutes of television.
- This is great news for the planet generally, but it is particularly important for our industry to understand, since environmental concerns have been one of the biggest barriers to entry for the NFT market
- This change may alleviate one of the most serious issues with NFTs, and may pave the way for more brands to use NFT technology and more consumers to feel comfortable diving in.
While the merge still has to take place, hiccups could occur, and other issues (like security, lockups, and increased fees) may arise, for now, there is reason to watch the market closely. WAGMI after all? We'll just have to wait and see.