One of the historic events in the crypto space took place on September 15th, 2022. The much anticipated Ethereum merge was done and successful. This saw Ethereum move from the PoW consensus mechanism to the PoS mechanism.
While its miners are being replaced by validators, the event also shook the crypto industry. Ethereum itself dropped over 17% after the merge. Hard-hit NFTs also saw sales surge after the merge.
The Merge is significant as it had both positive and negative effects on the industry. Dogecoin is one of the crypto assets that had a shift after the merge. The dog-themed coin is one of the top-performing crypto assets in a bearish market.
In this post, we’ll see how Dogecoin has gained from Ethereum’s transition from a proof-of-work mechanism to a proof-of-stake validation mechanism.
What is the Merge?
The Merge is one of the phases in the development of the Ethereum network. It is the transition from Ethereum’s mainnet Proof-of-work to the Proof-of-stake completely.
This means that Ethereum can no longer be mined but validated by staking ETH. This is a solution to the energy consumption of the proof-of-work [PoS] used by the bitcoin network.
After the merge has been completed, the other phases expected in the development of the Ethereum network are ”The Surge”, ”The Verge”, ”The Purge”, and ”The Splurge”.
Impact of the Merge on the Crypto Industry
As expected, the Ethereum merge took place on the 15th of September. The event is expected to be a benefit to cryptocurrencies but it hasn’t been.
The crypto market has been bearish for most of the year and hasn’t reached the limit of November 2021. Prices of several crypto assets including ETH itself turned red indexes for longer periods in 2022.
Many crypto experts have suggested that the merge would benefit the price of crypto assets, but it hasn’t been the case. Bitcoin, Ethereum, and several other altcoins have been down since the merge. BTC is selling at $18, 996.77 as of writing which is more than a quarter its price in November 2021 at $60, 000. This has also been the case with several other crypto assets.
Nevertheless, some crypto assets have benefited from Ethereum’s merge among which is Dogecoin.
How Dogecoin Benefited from the Ethereum’s Merge
One significant outcome of the merge event was that Dogecoin has now become the second-largest Proof-of-Work (PoW) consensus-based network.
DOGE took Ethereum’s position after the merge was completed. The meme-inspired cryptocurrency follows bitcoin closely as the largest crypto using the PoW consensus mechanism. Ethereum Classic, Litecoin, and Monero then followed BTC & DOGE as the largest crypto assets that can be mined as of today.
Dogecoin benefited from the change of status as it is placed in the tenth position on the list of the largest crypto according to CoinMarketCap. Before this time, DOGE was placed a place below the top 10 cryptocurrencies based on MarketCap.
The ‘joke’ cryptocurrency, DOGE is currently trading at $0.05926. It is 1.58% up in the last 24 hours and has a market cap of $7,859,872,307. It has a circulating supply of 132,670,764,300 DOGE coins and the total supply has no limit.
Although Dogecoin has moved up the crypto ladder, its PoW consensus-based network is much of a concern. This is because mining activities has effect on national grids. Some nations of the world have therefore called for a total ban as the energy-consuming PoW harms the environment.
Will Dogecoin Follow Ethereum to PoS?
The proof-of-stake is a much more energy-efficient consensus-based mechanism. This is one of the reasons Ethereum has moved to the consensus completely and would rely on validation rather than mining to add new blocks. The proof-of-stake mechanism is believed to cut electricity usage by 99.95% and make validations much faster.
The Dogecoin Foundation might have to go the same way for Dogecoin to be moved into a proof-of-stake (PoS) mechanism. Ethereum co-founder, Vitalik Buterin had made this suggestion a year ago. Buterin is an advisor to the Dogecoin foundation and this could happen in the nearest future.
What You Need to Know About the PoS Consensus Mechanism
Proof-of-stake (PoS) is one of the cryptocurrency consensus mechanisms. The PoS consensus is used for processing transactions and creating new blocks in a blockchain.
New blocks are being added by validation rather than using computer hardware as much energy as it is with PoW. In PoS, validators stake their coins and are then allowed to check new blocks of transactions and add them to the blockchain.
The validators help to check if the transactions are accurate and once confirmed accurate, users get their reward. The PoS mechanism is faster for transactions than the PoW consensus mechanism.
The much-anticipated Ethereum merge has been completed making the Ethereum network a full PoS consensus-based network. This move has unexpectedly made several crypto assets including bitcoin and Ethereum prices drop.
However, Dogecoin is one of the top crypto assets that have benefited from the merge event. The Elon Musk-influenced crypto asset is now the second largest PoW consensus-based network. It is now among the top 10 cryptocurrencies since the merge has been completed.