First Shadow Fork Launches on Ethereum Mainnet,Transition to PoS Gains Steam

The move from proof-of-work (PoW) to proof-of-stake (PoS), known as the merge, attained a landmark achievement after the first shadow fork went live on the Ethereum (ETH) mainnet.

As a the merge’s trial, the shadow fork is a means of stress testing state growth and syncing on the ETH network, according to Ethereum Foundation developer Parithosh Jayanthi. He added:

“We additionally wanted a way to check if our assumptions work on existing testnets and/or mainnet.”

Moreover, some information will be shared by both the shadow fork and the main Ethereum network. As a result, some transactions might emerge on both chains. 

Having already processed 1,558,014 transactions at an average block time of 13.8 seconds, the shadow hardfork showcases what the merge will entail, according to the block explorer page by Ethereum Foundation developer Marius Van Der Wijden.

Deemed as a historical event, Van Der Wijden came up with the shadow fork idea so that it could help with testing the merge. 

The merge is slated for Q2 2022 and will act as the biggest software upgrade in the Ethereum ecosystem. Validators will take up the role of miners when it comes to the confirmation of blocks based on the amount of ETH staked, given that it acts as collateral against dishonest behaviour. 

Market analyst Lark Davis recently noted that the merge would prompt a supply growth rate of -2.8% in the ETH network. He explained:

“At -2.8% supply growth a year post Merge, Ethereum will see about 3.3 million ETH a year burned. By the end of the decade total ETH supply will drop under 100 million. Or put another way, we will burn the equivalent of ALL ETH currently sitting on exchanges.”

Therefore, the merge is viewed as a game-changer that will make the ETH network cost-effective and environmentally friendly and boost the second-largest cryptocurrency as a deflationary asset.

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EU Parliament Committee Rejects Proposal to Limit Proof-of-Work Crypto

The European Parliament’s Economic and Monetary Affairs Committee voted Monday, a move that quashed the ban on the popular cryptocurrency Bitcoin across the European Union (EU).  The committee voted against the ban on Proof-of-Work mechanisms underlying major cryptocurrencies like Bitcoin and Ethereum. - 2022-03-15T102851.030.jpg

The committee decided to keep out the rule of the proposed Markets in Crypto Assets (MiCA) framework, the EU’s comprehensive regulatory package for governing digital assets.

The rule, which was introduced to the draft last week, aimed to limit the use of cryptocurrencies powered by an energy-intensive computing process known as proof-of-work across the EU’s 27 member states. The proposal was eventually repealed as a result of widespread opposition from the sector.

Dr Stefan Berger, EU parliamentarian in charge of the MiCA legislative framework, talked about the announcement on Twitter social media platform: “First stage win at #MiCA in committee! By accepting my proposal, members have paved the way for future-oriented crypto regulation. It is now a matter of accepting the report as a whole in the final vote & sending out a strong signal for innovation.”

However, Dr. Berger stated that the controversial paragraph has been withdrawn, but that a final decision had not yet been reached.

Switching to Proof of Stake

The use of Proof-of-Work (PoW) cryptocurrencies was uncertain following the draft of the European Union’s (EU) proposed legal framework for managing virtual currencies, known as the Markets in Crypto Assets (MiCA) framework.

The clause, which could have forced PoW cryptocurrencies to shift to more environmentally friendly mechanisms, failed to get the votes required in the parliament.

Major crypto assets like Bitcoin and Ethereum rely on PoW, a consensus mechanism underlying the digital assets that require a lot of energy to operate.

In recent months, the computing process has come under intense examination from legislators because of worries about the usage of energy. While the popularity of Bitcoin has grown, the controversy over its energy consumption and environmental impact has intensified.

As a result, some of the major cryptocurrencies like Ethereum and Dogecoin have shown intentions to migrate from the current Proof-of-Work (PoW) to Proof of Stake (PoS) crypto consensus mechanism. PoS refers to processing transactions and creating new blocks in a blockchain in an environment and efficient friendly manner.

However, there is still no consensus in the crypto community about the PoS model being better than PoW. Some users and well-known names in the market, like Jack Dorsey, have highlighted that the new method does not provide as much security to the network as proof of work offers. Meanwhile, there is no sign that Bitcoin, the world’s largest cryptocurrency, will migrate to the PoS system.

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Hungarian Central Bank Governor Advocates EU Wide Crypto Ban

The Governor of the Hungarian Central Bank, György Matolcsy, recommended that all cryptocurrency-focused activities including trading and mining should be banned across the European Union.


In a release published on the Magyar Nemzeti Bank’s (MNB) website, Governor Matolcy said his new stance aligns with those of the Russian Central Bank, as well as that of Erik Thedéen, the Vice-Chair of the European Securities and Markets Authority (ESMA) who said Proof-of-Work (PoW) should be banned in the EU.

“I perfectly agree with the proposal and also support the senior EU financial regulator’s point that the EU should ban the mining method used to produce most new bitcoin,” Governor Matolcy wrote adding that he believes it is “clear-cut that cryptocurrencies could service illegal activities and tend to build up financial pyramids.”

The Hungarian Central Bank boss said the Russian central bank was right when it said “the breakneck growth and market value of cryptocurrencies is defined primarily by speculative demand for future growth, which creates bubbles.”

Authorities around the world have often frowned at the chances of digital currencies being used for fraudulent activities, and many have moved against their proliferation through stringent regulations. While the ESMA executive cited by Governor Matolcy does not want an outright ban of cryptocurrencies as the Hungarian boss was suggesting, there is a broad agreement on tapering down the adoption of PoW mining which is generally known to be energy-intensive.

“The EU should act together in order to preempt the building up of new financial pyramids and financial bubbles,” Governor Matolcy said, adding that “EU citizens and companies would be allowed to own cryptocurrencies abroad and regulators will track their holdings.”

While the Hungarian Central Bank has its own jurisdictional powers, its influence on the entire E.U might not be so strong as those of the regional powers in the bloc. However, with two prominent leaders sharing similar thoughts on banning crypto mining, the recommendations may lead to a new consideration that could make the EU move against PoW mining amongst other regulatory crackdowns.

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Report crowns Solana for using least energy per transaction, but there’s a catch

Solana (SOL), one of the most active proof-of-stake (PoS) blockchains, appears to be a PoS protocol consuming the lowest amount of electricity per transaction, according to a new report.

The Crypto Carbon Ratings Institute (CCRI), a research startup focused on the environmental impact of cryptocurrencies, released on Wednesday a new report calculating the electricity consumption and carbon footprint of major PoS blockchains.

The CCRI specifically analyzed PoS networks including Cardano, Solana, Polkadot, Avalanche, Algorand and Tezos.

According to the CCRI’s findings, the Solana blockchain consumed 0.166 watt-hours (Wh) of electricity per transaction within the study, becoming the most energy-efficient PoS protocol in terms of energy used per transaction among the six analyzed networks.

Cardano, a PoS network that has the biggest market capitalization at the time of writing, consumes the biggest amount of electricity per transaction, which is 52 Wh, according to the report. However, when it comes to a “per-node” comparison, Cardano uses the least amount of electricity per node, the CCRI found.

Electricity consumption per transaction for PoS systems and Visa. Source: CCRI

“This metric depends on the amount of transactions taking place on the respective blockchain, also the overall electricity consumption per transaction further depends on the number of nodes connected to the respective network. Generally, these numbers are expected to go down with an increase in the transaction rate, regardless which blockchain is in use,” the study reads.

Despite Solana’s low energy consumption per transaction, the PoS protocol still consumes a lot of energy due to the network’s massive usage, compared to other PoS networks. According to the CCRI’s study, the Solana blockchain emits 934 tonnes of carbon dioxide equivalent per year, compared to 33 tonnes for Polkadot.

At the time of writing, Solana is the most-traded PoS protocol, with $2.9 billion in daily trading volumes, while Polkadot has about $900,000 in daily trading volumes, according to data from CoinGecko.

Yearly carbon footprint of PoS networks compared to a roundtrip flight in business class. Source: CCRI

Related: Fossils vs Renewables, PoW vs PoS: Key policy issues around crypto mining in US

Unlike major blockchain networks like Bitcoin and Ethereum, which use mining operations to confirm transactions based on a proof-of-work (PoW) mechanism, PoS blockchains rely on users simply locking up tokens. As PoS blockchains do not need extra energy from miners in order to validate transactions, they are considered as being more energy efficient.

As previously reported, many global financial regulators have used PoW’s high energy consumption rates as yet another reason to ban the use of cryptocurrencies like BTC. They would probably also want to ban global banks as the traditional banking system was reportedly consuming twice more energy than the entire Bitcoin network as of March 2021.