Proof-Of-Stake Ethereum far more energy-efficient

On September 15, Ethereum made the long-awaited switch to Proof-Of-Stake (PoS). PoS is 99.9% more energy-efficient than Proof-Of-Work (PoW) as was used before and is still in use for Bitcoin mining. In PoS staking tokens, e.g., Ethereum, replaces the energy-intensive mining – solving complex mathematical puzzles – of PoW. Furthermore, 51% attacks are exponential more costly in PoS than in PoW.

Given that this is the largest application of PoS to date, market watchers are concerned that the new consensus protocol might still have flaws. Flaws that hackers will exploit. In the first few days post-Merge – the rollout of the PoS protocol – only two Ethereum wallets are controlling around 46% of Ethereum transactions. In the coming period, the transaction burden is probably shared by more Ethereum wallets, reducing the risks of 51% attacks.

Ethereum founder Vitaly Buterin expects that the switch to PoS will reduce global energy consumption by 0.2%. This significant move towards a more sustainable Ethereum, takes away a major investor concern. Furthermore, is Ethereum now very competitive to PoS competitors such as Solana. However, great the improvement for the many Ethereum users and fans, there is yet a need for great caution. PoS is still not the near zero cost transaction network that most business applications would require.

The Icury of Icecat, defined in an Ethereum smart contract, will benefit from the PoS protocol and expected lowered transaction fees. We will monitor and test whether that leads to certain business applications becoming viable.

Martijn Hoogeveen

Founder and CEO of Icecat NV. Investor. Ph.D.