The Merge is happening tonight. Ethereum will be transitioning from Proof of Work to Proof of Stake. They have been talking about this for ages. I couldn’t believe it’s actually happening. This is a high stake move as there are currently $30B of tokens locked on the Ethereum chain according to DeFi Llama. (It was $100B last November.)
I am personally quite nervous about it. Things could go well or go horribly wrong. There are DeFi hacks every other week on the Ethereum chain. Supposedly they test The Merge on the testnets and everything works fine. But it doesn’t necessarily mean all the vulnerabilities are caught and addressed. There are probably hackers out there ready to strike. I didn’t dig super deep on how they execute the merge but the following is the list things I am particularly afraid of:
Attacks of the bridge contracts where a lot of crypto currencies are held
Attacks of major DeFi protocols like Uniswap, MakerDao, Compound or Aave during the transition
Bugs on the consensus layer that make the whole blockchain stuck or spewing out fraudulent transactions
States of L2 layers like Optimism or Arbitrum are messed up due to the transition
Centralized Exchanges wrongly approves fiat to/from crypto transactions during the transition
It’s likely I was over worried. I suppose the major stakeholders are well-prepared and all these are non-issues. But we will find out what happens in the next few weeks. If The Merge doesn’t work out as expected, the crypto space would be in deeper trouble. If it does, the crypto winter will probably still continue because of the macro environment. But at least we don’t have to pay sky high prices for GPUs any more and people can actually do useful things with the powerful chips.