On September 15, 2022, one of the most significant energy-saving events in human history - The Merge occurred. Ethereum was making history. That day, Ethereum&nbsp;accomplished the seemingly difficult task of transitioning from Proof-of-Work (PoW) to Proof-of-Stake (PoS), permanently altering the laws of the game in Crypto. However, it has also caused widespread alarm because of several severe bad characteristics that the Ethereum network has begun to exhibit quickly after the change. If these flaws are not addressed, the network's demise becomes a foregone conclusion. What is the situation with Ethereum, and why is its correction so important to its survival?<h2>The Ethereum’s pressure on Bitcoin</h2><h3>The Merge is changing everything</h3><a href="https://www.builder.news/crypto-insights/the-merge-a-pivotal-event-for-ethereum" alt="The Merge: A pivotal event for Ethereum" title="The Merge: A pivotal event for Ethereum" target="_blank" rel="" class="">The Merge</a> will have far-reaching consequences for the Ethereum network. It marks a shift in Crypto's dilemma. A departure from the status quo. A challenge to the mainstream historical narrative; a challenge to Bitcoin. But why is that?Blockchains are distributed networks that determine the status on which all nodes (or the majority) agree by continually confirming transactions. Being a validator for a blockchain allows you to receive incentives in the form of the blockchain's native coin. However, only the node picked to propose the next block — or group — of transactions is eligible to receive the rewards. In other words, Ethereum has altered how a particular node is selected to submit the next transaction block to the chain (consequently earning the incentives).This modification is a direct challenge to Bitcoin. PoW is one of Bitcoin's combat horses. Proof-of-Work is a consensus mechanism that uses a guessing mathematical competition to choose which node will add the next block to the chain. The node that finds the nonce with the smallest hash (an irreversible mathematical modification performed to the nonce used only for ciphering data) wins.However, the only way to get the hash of a number that may include hundreds of digits is by your guessing it. Therefore, incredibly powerful computers known as ASIC miners that use a lot of energy are required by miners (the individuals validating transactions and participating in this guessing game). And why has The Merge generated so much attention throughout the years? It's simple: The Merge is telling Bitcoin in the face that "you're a waste of energy."&gt;&gt;&gt; Read more:&nbsp;<a href="https://www.builder.news/crypto-insights/how-ethereum-proof-of-stake-affect-miners-swTcG" alt="How will Ethereum's Proof of Stake affect miners?" title="How will Ethereum's Proof of Stake affect miners?" target="_blank" rel="" class="">How will Ethereum's Proof of Stake affect miners?</a><h3>The Merge is a significant historical event in terms of energy</h3>In the case of Bitcoin, the mining process we just outlined uses huge amounts of energy daily, equivalent to powering nations like Austria or Denmark. If you think about it, it's absurd. With the switch to PoS, Ethereum has lowered its energy use and carbon dioxide emissions by 99.988% and 99.992%, respectively. One of the largest energy consumption reductions in history, the fall is so significant that it is said to have decreased global use of energy by 0.2%.<img src="https://cdn.builder.news/news/11ed438d32fc4887a8e6023f659fee92.jpg" alt="Energy per tx" title="Energy per tx" width="600" height="441" class="lykafe0">That is a strong statement. To achieve this, nodes stake their Ether holdings rather than depending on robust computers to solve the mathematical problem mentioned earlier in PoW. The more your stake, the greater your chance of being selected. In PoS, energy consumption is no longer the resource that sustains the chain.What makes this significant? Easy. Energy consumption is bad, according to the ESG narrative that increasingly guides most corporate choices Consequently, even if Bitcoin's energy sources are primarily renewable energy sources, any component that uses a lot of energy is harmful to the environment. Nevertheless, Bitcoin is vilified for its alleged needless energy usage. However, this negative narrative about Bitcoin's energy usage willfully ignores a crucial truth.It's excellent that the world is moving toward an energy system where renewable energy sources will make up the bulk of the energy supply. Demand response systems, which can be quickly turned on or off based on demand, are essential for future energy grids since renewable energy, particularly wind and solar energy, is incredibly unpredictable. Surprisingly, large electricity grids like the one in Texas already employ Bitcoin mining centers as an outstanding demand response component.<h2>The over-centralization problem</h2>Nonetheless, Ethereum's shift puts more on Bitcoin's energy usage, with organizations like Greenpeace applauding Ethereum on its decision and 'urging' Bitcoin to follow suit.Unfortunately, The Merge was not going to be all about happy endings. In reality, it has caused a major problem for the network. A problem that has the potential to stymie Ethereum's progress and spawn malicious acts and repercussions that might finally destroy it.Ethereum is getting increasingly centralized. Due to the huge volume of ETH they are staking, Coinbase or Lido have added around 400 additional blocks to the network since Thursday's integration. Furthermore, only seven firms own more than one-third of Ethereum's new proof-of-stake network. This is bad on so many levels that it must be addressed immediately.But why is this so bad for Ethereum? Centralized blockchains are like pretending to eat soup with a knife. We're not going to make an exception for Ethereum. There are two reasons to be concerned in this case:<ul><li>It is a direct assault against Crypto's fundamental ideas. If cryptocurrency is centralized, it makes no sense. The decentralized nature of blockchains is their primary strength. Crypto is about creating systems that are immutable, where data is highly accessible and entirely traceable, and that is immune to censorship. In other words, systems that are so safe that hacking is out of the question; are a location where data ownership and privacy are assumed. Only appropriate decentralization allows for this.</li><li>Decentralized systems provide these benefits because they lack single points of failure, and a hostile actor would have to dedicate massive resources to even attempt to breach the blockchain. In centralized networks, certain blockchain characteristics are not conceivable. Platform-level centralization indicates the possibility of transaction censorship. This is the most difficult for us. Censorship should never be an option in crypto initiatives. Truly decentralized networks, on the other hand, are difficult to censor.</li></ul>Unfortunately, Lido, Coinbase, and the other major stakers might simply band together to control transactions. Assume the US government insists that every transaction with Aave, a lending DeFi protocol, be filtered. Because these firms together control the bulk of staking on the Ethereum network, they may agree to censor any transaction originating from Aave. Users of this protocol are suddenly left with no loans, money, or property and they can do nothing about this.This should not happen in Crypto, since then what is the point? Cryptocurrency would essentially become a gilded replica of the status quo. If we're going to have the same problems as old systems, why bother converting to Crypto in the first place?<h2>Is there a clear solution?</h2>Proposer/Blockbuilder Separate (PBS) emerges just when you thought centralization was about to destroy Ethereum at the moment. The fact is that these worries about centralization were already anticipated. This was known to Vitalik and the rest of the Ethereum developers for quite some time.PBS has already been accepted and will be implemented on the Ethereum network in the near future. And PBS will rapidly resolve these concerns. But what exactly is PBS and what problems does it solve?The nodes in charge of validating transactions in the Ethereum network, known as validators, have two responsibilities:<ul><li>Build blocks:&nbsp; Validators select the transactions they wish to include in their proposed block while scanning the mempool (the location of waiting transactions) for transactions to validate.</li><li>Propose blocks:&nbsp; Once a block has been constructed, proposers select which block to add to the chain.</li></ul>Are you able to notice the issue already? In this scenario, the same nodes that construct blocks by analyzing transactions also recommend which blocks should be picked. Censorship can be proposed while still having your blocks picked.<h2>What does PBS offer?</h2>It proposes dividing those two operations into distinct actors:<ul><li>Block builders: They have access to all transactions and are capable of creating the most lucrative block imaginable. To be picked, they must seek for the most profitable blocks — those with the most profitable transactions — since otherwise, proposers will not choose them. As a result, block builders are driven to censor by design, because censorship would likely result in an inferior block build, resulting in not being picked.</li><li>Block proposer: They offer the builder's block that optimizes their profit. Because proposers lose the ability to view transactions, censorship is also out of the question.</li></ul>Censoring isn't profitable with PBS, and with a more crowded validator market, it's unlikely to be a choice. PBS is an effective censorship barrier, but it also promotes decentralization by adding a two-player mechanism, which allows more individuals to participate in Ethereum validation.ConclusionDecentralization is still a big problem for Ethereum. An entity like Lido alone controls more than 30% of the total staked Ethereum (it only takes 33% to have the power to halt or censor the chain). People often criticize Solana for its centralization but it seems like Ethereum is who deserved to be criticized here.<img src="https://cdn.builder.news/news/11ed438d32fc511fa8e6023f659fee92.jpg" alt="ETH staked by entity" title="ETH staked by entity" width="600" height="231" class="lykafe1"> Ethereum will be slain multiple times in the next months and years, but its main defense will be its ability to drive innovation and continuously seek better technological solutions to its challenges. And that’s how Ethereum reigns supreme.<div class="pr-block-special">Disclaimer: This article is intended for and only to be used for reference purposes only. No such information provided constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific name.</div>

The Merge will have far-reaching consequences for the Ethereum network. It marks a shift in Crypto's dilemma.

The post-merge scenario: Is Ethereum bringing the negative?