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Ethereum is one of the top cryptocurrencies, right behind Bitcoin in terms of market cap and overall popularity. Despite the recent bear market, it has been relatively stable compared to altcoins. The ETH roadmap for the next few years is particularly exciting and promises a paradigm shift in our conception of cryptocurrencies.
“The Merge”, or as it was previously known, ETH 2.0, will transform Ethereum from a Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS) consensus mechanism. The energy-intensive mining that currently exists under PoW will be replaced by a sustainable staking system where ETH holders can stake their tokens to become a validator and keep the blockchain safe while earning rewards themselves.
Multi chain is a concept. It refers to a system or general state of the cryptographic sector that allows more than one chain of blocks to exist at the same time. At a basic level, it works on the bridge concept, where a bridge connects two different chains at the same time. When transferring assets from one chain to another, the asset is embossed in the destination chain and the wrapped version is burned in the previous chain. The opposite occurs when the asset is released back down the original chain, a process known as “trading.”
One of the most exciting features of multi-chain technology is the ability to build chains that can process transactions faster and cheaper than the traditional chain. This opens the door to many different use cases, including new coins, sidechains, and other innovations. This allows for the creation of more complex smart contracts, which in turn provides the opportunity to create more advanced decentralized applications (dapps).
The best way to think of a multi-chain network is to think of it as a blockchain network made up of multiple chains. These chains can be thought of as individual blockchains linked together through a common blockchain history.
See also: On the Internet of Ethereum blockchains
How multi-chain interacts with Ethereum
The biggest hurdles to widespread crypto adoption are high-volume congestion and scalability challenges. These challenges result in longer transaction processing times and higher transaction fees, creating frustration and reducing the likelihood of cryptocurrencies being adopted for everyday use. Ethereum in particular faces these issues frequently, with wait times ranging from five minutes to occasionally more than three or four hours.
Multi-chain aims to eliminate these issues by allowing you to participate in a cross-chain ecosystem, increasing overall efficiency and reducing wait times. As it stands now, the DeFi ecosystem lacks flexibility, prohibits cross-chain transactions and effectively reduces the number of serious competitors to a few large chains due to high gas fees and waiting times. Within a multi-chain ecosystem, not only are costs and lead times reduced, but the rate of innovation increases as developers can tap into and learn from each other’s systems, reducing complexity and increasing productivity.
Ethereum is planning a major change in its architecture known as The Merge. Switching to a PoS model eliminates many of the problems you currently face as lower fees and faster transactions are expected from a less computationally intensive model compared to PoW.
The merge update is expected to be released in Q2 2022, which could spell the end of the current bear market, at least for ETH and cryptos based on the ETH chain. Tokens can already be transferred to Ethereum via L2 stacks, and the stacks increase the TPS (transactions per second) of the chain to a respectable 2000-4000 TPS. Even Visa, one of the largest payment methods, only processes 1700 TPS.
Related: Explore the Modern World of Cryptocurrencies
What the future brings
With current and planned improvements to the Ethereum blockchain, multiple chains could become obsolete and Ethereum will become the dominant chain in terms of transaction volume. But then again, it doesn’t necessarily have to be the death knell for multi-chains. Instead, the two could embrace a symbiotic relationship. As Ethereum gains efficiency, collaborating with multiple chains could further reduce wait times.
There are several blockchains in the works like BSC, Solana, and L2 chains like Polygon, and each of them has unique advantages and disadvantages. These pros and cons are facilitating the growth of multi-chains and tell us that a wide range of options is better than one blockchain dominating the market, especially as non-currency projects such as identity verification, NFTs, etc. emerge. Using the blockchain in different ways.
With multi-chain, competition takes a back seat and collaboration to deliver the best possible quality becomes a priority, ultimately improving the user experience. It is comparable to the beginnings of the Internet, when there were individual networks for universities and offices and a common Internet was still in its infancy. Over time, all technologies improve and mature until they become ubiquitous, and blockchain is no different.
Related: Learn to create your own projects on the Ethereum blockchain
In order to benefit from the recent trend towards DeFi, a stable and secure infrastructure is urgently needed. Ethereum’s multi-chain collaboration will eliminate some of the biggest issues prevalent in the blockchain ecosystem, paving the way for widespread adoption and a decentralized economic future.