The Ethereum blockchain’s transition from a proof of work (PoW) consensus mechanism to proof of stake (PoS) seems imminent, with an Ethereum Foundation member saying recently that the switch is provisionally expected in mid-September, Bank of America (BAC) said in a research report last week.

The Merge, the first of five planned updates for the blockchain, will combine Ethereum’s existing execution layer with the Beacon Chain, a PoS consensus layer, the report said.

“PoS decreases Ethereum’s energy consumption by over 99%, lowers barriers to entry for investors to generate yield as network validators and alters ETH’s supply/demand dynamics,” the bank said, referring to the system’s ether token.

The transition also acts as a precursor for the “Surge,” the second of the planned upgrades, the note said. That will aim to improve Ethereum’s throughput from around 15 transactions per second (TPS) to about 100,000 TPS while reducing transaction fees, it added.

Without the scalability improvements, Ethereum is unlikely to remain as the dominant blockchain operating system, the bank said.

Bank of America notes that newer blockchains such as Binance Smart Chain (BSC), Tron, Avalanche and Solana have taken market share from Ethereum because of their PoS consensus mechanisms and greater scalability, adding that these features will “likely be key as the Web 3 ecosystem of decentralized applications emerges.”

Web3 represents the next generation of the internet, one that focuses on shifting power from big tech companies to individual users.

Read more about


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Read More