The Ethereum Merge, What Next? Uncertainties and What to Expect
The Ethereum merge is complete, and this may be the single most important change in NFT creation and use history for now. Why is Ethereum's transition from proof-of-work to proof-of-stake important? Simply put, it denotes the beginning of a new era in which NFTs are environmentally friendly.
If you haven’t been on Earth for some time and don’t know what we’re talking about, you can check our previous post on what the Merge is all about and its impact on NFTs.
Table of Content
#1 - A Significant Point in NFT History
#2 - One Less Criticism for Ethereum NFTs
#3 - Some Things Just Don’t Change - For Now
#4 - Holding A Piece of History
#5 - The Merge Comes With Some Uncertainties
#6 - Some Hope?
#7 - Our Thoughts
A Significant Point in NFT History
One may argue that the Ethereum merge is the single most significant software update in decades. Why? Simply put, it makes the process of creating and verifying NFTs on the blockchain much more energy efficient.
The proof-of-work method, which used large amounts of decentralized power to execute transactions through a direct link between miners, has been replaced with a more efficient mechanism that employs pools of the tokens held in "staking wallets," with contributors receiving as much as 5.2% yield for their efforts.
One Less Criticism for Ethereum NFTs
What's important, though, is that the Merge considerably reduces Ethereum's carbon footprint because of the decrease in energy use. According to estimates, energy consumption for Ethereum may decrease by as much as 99.99 percent.
The reduced energy requirement eliminates a common argument against NFTs, opening the door for Ethereum to become the most popular blockchain for NFTs once again.
Solana and Polygon, two environmentally friendly cryptocurrencies, have recently seen a surge in popularity. For instance, the use of the NFT marketplace Magic Eden has increased dramatically, considering that it is the leading Solana platform.
Some Things Just Don’t Change - For Now
Before Ethereum completed the merge, some users speculated that the de-facto NFT blockchain's efficiency improvements might reduce or eliminate the need for gas fees.
Sadly, that's not the case. In the short term, gas fees will remain unchanged after the Merge, at least on the main Ethereum network. That's because Ethereum has a long list of improvements in the works, and the Merge is only the beginning.
This is one of the many reasons Solana's early adopters like Okay Bears could decide to increase their investment in Solana at the expense of Ethereum.
Holding A Piece of History
The switch from proof-of-work to proof-of-stake on Ethereum was a once-in-a-lifetime occurrence. To commemorate the occasion, niche NFT project VanityBlocks minted an NFT at the very edge of the Merge.
According to Etherscan, there is only one transaction, a VanityBlock NFT, in the last chapter of the network's PoW ledger.
After successfully soliciting investors, the NFT's creators spent 30 Ethereum (about $50,000) in the early hours of Thursday to mint the NFT. The cost is equal to the maximum amount of transactions Ethereum can fit into a single block, which is currently 15,537,393.
"The Last POW Block" NFT is now up for auction on OpenSea, where it has already received a bid of 10 ETH, or $16,118.10 at the time of writing. Block 15,537,393 itself represents a genuine piece of blockchain history and will join the likes of other historical NFTs like CryptoPunks.
The Merge Comes With Some Uncertainties
Beyond the Merge's sustainability features and the possibility for improved security and future scaling updates, the Ethereum NFT community might have a lot to deal with if a post-merge hard fork allows Ethereum miners to continue running a proof-of-work chain.
If the blockchain becomes split into two chains for any reason, duplicate NFTs will exist owing to the ETH proof-of-work ('ETHPOW') chain and other possible forks." This is in addition to the new proof-of-stake ("ETHPOS") chain.
There is likely to be some amount of uncertainty, especially around whether assets are 'official' or 'genuine,' among other things.
According to DLA Piper, several problems arise in such a situation, including;
Which [of the post-fork] NFTs has the license to the artwork that the creator provided to the buyer upon purchase?
On which blockchain (ETHPOW or ETHPOS) is the license stored?
Moreover, who makes these choices?"
Plus, suppose an NFT holder sells an NFT to a buyer on the ETHPOW network but keeps the ETHPOS blockchain duplicate? What happens to the license after the sale: does it stay with the current owner, or does it go to the new buyer?
If you already use Ethereum and have NFTs built on the blockchain, you have nothing to worry about—for now. The largest NFT marketplace, OpenSea, announced that following the merger, it would only support proof-of-stake NFTs. Other marketplaces haven’t commented on this issue, but we’re confident they might take a similar approach.
In many ways, the Ethereum merge marks the coming of age of NFTs. There are still battles to be fought, such as separating non-fungible tokens from the whims of the market and shifting the focus of projects away from digital art. This will take a lot of effort from the entire NFT community, but the Merge is one step in the right direction.
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