The Ethereum Merge will be a gamechanger when it comes to the future of Ethereum and the blockchain world. As we wait for the big day, it's important to consider what this kind of transition could mean for other layer 1 blockchains.
The Ethereum community is eagerly awaiting the shift from the proof of work consensus mechanism, to the proof of stake mechanism on Ethereum. The current consensus mechanism on Ethereum is energy-intensive. When it transitions to the PoS mechanism, it is expected to cut energy consumption by 95%.
The potential benefits are numerous. It will bring unprecedented scalability, speed, and efficiency to the Ethereum community. It will bring numerous advantages and capabilities while eliminating current weaknesses plaguing the Ethereum blockchain. For example, one of the major improvements will be speed. Currently, Ethereum processes around 30 transactions per second. Under the new PoS model, it will have a capacity of up to 100,000 transactions per second.
What Does the Ethereum Merge Means For Other Layer 1 Blockchains
The Ethereum Merge is a major upgrade that will make Ethereum much more scalable. Currently, there are numerous blockchains that are faster, less expensive, and more scalable than Ethereum. These include Solana, Polkadot, Cosmos, Binance Smart Chain, and Avalanche. While these blockchains are faster and more scalable than Ethereum, they lack the developer support and ecosystem that is found on Ethereum. These projects don’t have a strong development community and can't compete with a large amount of activity that has been seen on Ethereum's Ropsten Testnet which has about three times higher transaction volume than all other Layer 1 blockchains combined.
Despite all this, there has been a fear among some ETH holders that these other projects could steal market share away from ETH if their technology was able to gain adoption before improvements such as the Ethereum Merge were completed. The recent rise in popularity of decentralized finance (DeFi) apps has been cited as an example of this. DeFi apps were originally built on top of Ethereum because it was the only viable smart contract network at the time.
With the L1 dominance of Ethereum being challenged and a number of new competing platforms catching up to the pioneering blockchain, the Ethereum Merge will allow it to continue its reign as the preeminent platform for new projects.
Why this is good for Internet Computer
While the recent Proof of Stake upgrade spells disaster for most other blockchain projects, it has been nothing but good news for the Internet Computer Project. A major reason for this is that most (if not all) other Layer 1 blockchains were built to compete with Ethereum. As a result, they are highly incompatible with the network.
However, IC is a complement to ETH. The IC blockchain does not need bridges to connect to Ethereum; it uses a clever workaround that allows it to integrate with the Ethereum blockchain. This means that in addition to being able to run its own applications, it can also run Ethereum-based applications as well.
Internet Computer has the goal of becoming the future of the internet. Its goal is to create a globally distributed network of data centers from which all types of applications can run. This network is designed to be accessible via existing internet standards such as the DNS system you use when browsing the internet.
Ethereum and IC complement each other in that IC was created to decentralize the entire internet and Ethereum could be considered a highway for decentralized finance.
In essence, IC wants the entire internet to be decentralized, while Ethereum aims to ensure that users can access all financial services without having to resort back to centralized service providers.
While moving to the PoS model will bring major improvements to Ethereum, it is not going to solve all the issues needed to decentralize the entire internet. Working with complementary networks is going to be essential to the future success of Ethereum’s vision. Integrating with Internet Computer will bring major advantages for all users on Ethereum, giving developers the flexibility and creativity to create dApps similar to Web2 applications.
However, with Internet Computer, developers will not be limited to the rate at which Ethereum Merge grows. Instead, they can take advantage of all the developments in the Ethereum ecosystem, while also being able to come up with independent uses for the blockchain.