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Mahesh

20/09/22 21:50 PM IST

Ethereum Merge hits graphic cards, but GPU-based mining is not dead

In News 
  • Ethereum’s shift of its consensus algorithm from proof-of-work (PoW) to environment-friendly proof-of-stake (PoS) in an event called ‘The Merge’ recently will result in sizeable graphic card (GPUs) dump and hit manufacturers such as Nvidia and AMD.
Ethereum 
  • Ethereum is one of the most used platforms by developers to build decentralised apps (dApps), smart contracts, and even crypto tokens. The platform’s currency, Ether is only second to Bitcoin (BTC) in terms of market capitalisation.
Merge Event 
  • Ethereum is about to undergo perhaps its most transformative upgrade since its inception.
  • The Merge is transitioning from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism, which is used for authenticating transactions.
Proof of work mechanism 
  • PoW is a consensus mechanism used to verify and add new validated transactions to a blockchain. To this end, virtual miners around the globe compete to publish new blocks of transactions by being the first to solve cryptographic puzzles using high-powered computers.
  • Under PoW, each block of the transaction has a hash attached to it. For a block to be validated, the miner has to generate a target hash that is less than or equal to that of the block. The miner first to generate this target hash will be able to update the blockchain and receive the reward. PoW has some significant advantages such as increasing the power and security of the network. On the flip side, however, PoW is energy-intensive PoW, can lead to scalability issues, and makes the transaction process more costly.
  • This transition could not be timelier given the surge in DeFi platforms and dApps, rising stablecoin usage, and the escalation in NFT minting and sales. The transition to PoS will overcome the deficiencies in the PoW mechanism, especially the scalability issues plaguing Web3’s ecosystem including network congestion and rising gas fees.
Proof of Stake mechanism 
  • PoS is a consensus mechanism processing transactions and adding new blocks to the blockchain. However, PoS, does away with the miners, and passes the network’s control to validators, attributing mining power to them based on the number of coins they stake. While PoW requires miners to solve complicated cryptographic puzzles, PoS, on the other hand, requires validators to hold the coins and offer them as collateral for the chance to validate blocks. Those with staked coins become validators.
  • To become a validator, a specific number of coins have to be staked. For instance, in the ​​upcoming PoS system, validators are selected to create blocks. The validators for each block transaction are selected using an algorithm. The amount of stake and validation experience, the number of coins staked, and the length of time those coins are in the pool are among the dedicated variables. The more ether they stake the more chance they have of being selected. The miner receives a transaction fee once the block is verified and added to the blockchain.
Source- Indian Express 

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