The Merge of Proof of Work and Proof of Stake

After years of anticipation and development, the Ethereum blockchain is finally on the verge of transitioning its consensus mechanism from proof-of-work to a more energy-efficient mechanism known as proof-of-stake.

According to a blog post from The Ethereum Foundation, switching the consensus mechanism of the blockchain is like changing the engine of a spaceship, and in just a few days, it will be “time to hot-swap the new engine for the old mid-flight.”

In this special Ethereum Merge edition of The Scoop, Lex Sokolin, head economist at leading Ethereum development company ConsenSys, examines the implications of Ethereum’s Merge for the future of the network. During the discussion, Sokolin explains why the switch will help improve the reputation of web3 outside of the crypto space — particularly with those who prefer ESG investments.

A long-standing criticism of cryptocurrency technology singles out the amount of energy required to power the underlying blockchains. According to Sokolin, the fact that Ethereum is set to reduce its energy consumption by roughly 99.95% will help alleviate this concern:

“I think removing the objection around ESG is very meaningful because it does change culturally some of the value proposition of Ethereum to those communities who take really seriously these issues around electricity consumption and impact.”

By removing ESG concerns, Sokolin hopes more people in the world will be able to see the potential for web3 technology, without having to worry about negative externalities.

As Sokolin explains,

“A lot of how people align with web3 and crypto is through idealistic storytelling about what the world could be, and it's really important to be open minded and have a kind of hope for what new platforms can create.”

Episode 84 of Season 4 of The Scoop was recorded remotely with The Block's Tim Copeland and ConsenSys Head Economist Lex Sokolin.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher or wherever you listen to podcasts. Email feedback and revision requests to podcast@theblockcrypto.com.

This episode is brought to you by our sponsors Tron, Chainalysis & IWC Schaffhausen

About Tron

On August 1st, 2022, Poloniex launched a faster and more stable trading system along with a brand new user interface. Poloniex was founded in January 2014 as a global cryptocurrency trading platform. With its world-class service and security, it received funding in 2019 from renowned investors, including H.E. Justin Sun, Founder of TRON. Poloniex supports spot and margin trading as well as leveraged tokens. Its services are available to users in nearly 100 countries and regions with various languages available. For more information visit Poloniex.com.

About Chainalysis

Chainalysis is the leading blockchain data platform. We provide data, software, services, and research to government agencies, exchanges, financial institutions, and insurance and cybersecurity companies in over 60 countries. Backed by Accel, Addition, Benchmark, Coatue, Paradigm, Ribbit, and other leading firms in venture capital, Chainalysis builds trust in blockchains to promote more financial freedom with less risk. For more information, visit www.chainalysis.com.

About IWC Schaffhausen

IWC Schaffhausen is a Swiss luxury watch manufacturer based in Schaffhausen, Switzerland. Known for its unique engineering approach to watchmaking, IWC combines the best of human craftsmanship and creativity with cutting-edge technology and processes. With collections like the Portugieser and the Pilot’s Watches, the brand covers the whole spectrum from elegant timepieces to sports watches. For more information, visit IWC.com.