After seven years of R&D, proof-of-stake is finally working on ethereum testnets and looking like it’s months away from final launch, the network’s cofounder Vitalik Buterin said at ETHDenver last month. Investors are betting the change will be significant for the price of ether, which has gained more than 50% since the end of June, compared to a slight loss for bitcoin. High costs and slow transaction times are currently two of the main issues users have with the Ethereum network. \u201cThis is where a great deal of innovation is happening today, and indeed a challenge that blockchains will have to overcome if they are ever to become widely used on a global scale,\u201d he says. And though staking is not as directly damaging to the planet as warehouses full of computer systems, critics point out that proof of stake is no more effective than proof of work at maintaining decentralization. Its creator wanted to do away with the control that third parties, often big banks or states, exerted over financial systems.<\/p>\n
We won\u2019t know right away whether the Merge\u2014the moment when Ethereum\u2019s main network joins with the layer that is using the new consensus mechanism\u2014lives up to its transformative promise. In July, Buterin said he\u2019d consider Ethereum only 55% \u201cdone\u201d after the Merge. The more ETH someone has to stake, the more validators they can run, and the https:\/\/www.xcritical.in\/<\/a> more rewards they can accrue. The rewards scale linearly with the amount of staked ETH, and everyone gets the same percentage return. Proof-of-work enriches the rich more than proof-of-stake because richer miners that buy hardware at scale benefit from economies of scale, meaning the relationship between wealth and reward is non-linear.<\/p>\n