Ethereum is the most actively used blockchain in the world. Its native currency, Ether (ETH), is only second to Bitcoin in terms of market cap and trading volume. This blockchain acts as a world computer for decentralized applications. Russian-Canadian prodigy Vitalik Buterin first proposed the concept of Ethereum. The open-sourced application used a mechanism called decentralized Finance that qualifies Ethereum as a DeFi platform.
According to the updated notes published on ethereum.org, Buterin proposed the possibility of a merger between Proof of Work (PoW) and Proof of Stake (PoS) blockchains. PoW is a form of cryptographic zero-knowledge proof that deter frivolous or malicious use of computing power. PoS is a consensus mechanism that enables blockchain networks to achieve distributed consensus. Buterin proposes to add (Remote Procedure Call) RPC submitBlock mechanism to ethpow node for transferring consensus to PoS nodes.
The DAO hack and Emergence of Ethereum 2.0
Like other DeFi platforms, the Ethereum network is also susceptible to frequent hack attacks. In 2016, a hacker stole $50 million worth of Ether by finding a loophole in a third-party project called DAO. DAO is a digital decentralized autonomous organization that acts as a Venture capital fund for crypto investors. In the aftermath of this attack, the Ethereum community agreed to add a hard fork in the blockchain to reverse the theft. As a result, Ethereum was split into two blockchains called Ethereum 2.0 and Ethereum Classic. The Ethereum 2.0 upgrade is a type of Proof of stake (PoS) transition.
For the recent Merger, Buterin plans to switch the ethpow fork to the beacon chain. With this method, the possibility of withdrawals would be supported by a post-merger hard fork. The stacking deposits can stay still after the merger until any other hard fork occurs. A few blueprints and prototypes for this model are already made public. The merger is supposed to act likewise and subsequently switch consensus to stakers through current nodes.
According to Buterin, his proposal is only a micro presentation of the actual merger. The stress point in this model is the Zero hash that would occur if the current head is directed by a beacon block. Since the fork choice selects the head as being ethpow block that is contained as a unit of head beacon block. Danny Ryan, who is an Ethereum 2.0 coordinator, has also prepared a demo to showcase this transition. In this demo, the unification of ETH mainnet with upgraded ETH 2 consensus is broadcasted.
Some points of concern like miners colluding can be an anticipated challenge for this merger. There is an ongoing rumor in the market that Ethereum miners plan to concentrate 51% of hashrate on Ethermine as a collective show of force. However, Buterin is positive that minimal merge would be simplified by a hard fork that would also clean out unwanted bits and creating organic coordination between the application layer and beacon chain. After this merger, the miners would not be able to participate in the consensus settings, and the transaction authority would be shifted to stakers via dapps.