19 Feb 2025

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Ethereum PoS Switch: What Will Change Now?

Ethereum PoS Switch: What Will Change Now?

Ethereum’s recent switch to the Proof-of-Stake (PoS) model, coupled with a multi-phased upgrade, including the Beacon Chain, the Merge and Shard Chains, made headlines around the world. And for all the right reasons. The transition has been anticipated for many years due to several circumstances that we will shed light on in this article.

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Proof-of-Work: Takeaways

In the crypto-verse, Proof-of-Work (PoW) is a form of cryptographic evidence in which one party proves to others that a certain amount of a specific computational effort has been gone through. In PoW, so-called miners solve complex algorithms and validate blocks. Since over the years, the complexity of algorithm solutions has increased, it also resulted in greater electricity intensity, which is making the system effectively unsustainable.

Most tokens are built on the PoW system, including the mother of all crypto Bitcoin. However, the problem with this system is that it is very power-consuming. In 2021, the New York Times reported that Bitcoin uses greater volumes of electricity than many countries, which is, mildly put, not so good for the environment. And this is also why it harnessed a lot of criticism even though there are many counterarguments present too.

Enter the Proof-of-Stake system

To tackle the problem, an alternative method of validation has been introduced called PoS.

Although similar to it as it requires to validate transactions, the method still differs as it entails the presence of so-called validators, people who stake a certain amount of cryptocurrency into the network to earn rewards afterward. These people are effectively responsible for validating transactions made on the network they’re participating in. S/he earns a reward for performing the task, which serves as an incentive for them to join the platform.

“When blockchain participants verify that a transaction is legitimate and add it to the blockchain, we say that participants have achieved consensus,” Marius Smith, head of business development at digital asset custodian Finoa, explains.

This concept goes in line with decentralization which is key to Ethereum’s project, which is why it caught ETH co-founder Vitalik Buterin’s attention.

So why did Ethereum switch to it?

There are three major reasons. 

Firstly, PoS is indeed more sustainable energy-consuming-wise, which is much better for the environment. 

Secondly, Ethereum aims to improve scalability, i.e. the number of transaction-per-seconds it can carry out. Over the years, the issue of scalability has been a recurrent one as despite upgrades and progress the Ethereum blockchain still has a long way to go to become a seriously scalable platform.

Thirdly, unlike the PoW system, PoS doesn't require expensive hardware for mining and huge electricity bills, making it more accessible to ordinary folk.

To find out more about the pros and cons of this switch, read this article.

Is Ethereum the only PoS-based crypto?

The short answer is no. Other projects like Solana and Cardano are also PoS based. The notorious Terra, which fully crumbled in May but saw a resurrection recently, was also PoS-based. 

Terra 2.0 cryptocurrency blockchain also uses the typical PoS consensus mechanism.

Stay tuned as we cover more on Ethereum’s upgrade. Learn more on the subject in our previous article.

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