Vitalik Buterin, co-creator of Ethereum, tweeted that the network had successfully completed the "Merge" to a new, more energy-efficient token generation protocol. The "proof-of-work" system, which requires extremely powerful computers to complete cryptographic tasks, will no longer be used to mint new Ether. Instead, "proof-of-stake" techniques will be used to generate them; these techniques will require users, known as validators, to stake tokens in exchange for the opportunity to validate transactions and earn a reward.
In the past, mining Ethereum required a formidable network of computers to tackle complex mathematical problems. In addition to being a major energy drain, this also made scaling Ethereum and increasing transaction costs for small amounts. In addition, it centralized control, which is counter to the spirit of crypto's decentralization.
The more a validator bets in the new system, the greater their chance of receiving a reward. Staking ether is like investing in a bond or a savings account because all staked ether earns interest (around 5.2%). (apart from the wild market volatility, of course). An individual can do pooled staking with reputable third-party validators to meet the minimum stake amount of 32 ether (approximately $50,000 at the time of writing).
Named "The Merge," this transition is merely the first stage of the Ethereum blockchain's integration with a parallel network that has been in operation for nearly two years in a proof-of-stake test. "The issues of scalability and privacy must still be addressed. It seems to me that the Merge represents the transition from the Ethereum of today to the Ethereum of the future "declared Buterin at a Merge party that was broadcast online.
While Ether did start the day higher than it did the day before, it has since fallen. There are still many unanswered questions regarding regulation, Ethereum forks, and more, making it difficult to predict whether or not the Merge will actually transform crypto. As is customary in the crypto world, there is also the possibility of fraud, including, but not limited to, the duplication of transactions from the old chain onto the new one.