The Ethereum Merge impact on NFTs
The Merge event saw Ethereum upgrade to a Proof-of-Stake (PoS) network. It took place on September 15th, 2022, and came with many benefits, including lowering the blockchain's carbon footprint.
Before it took place, the highly anticipated event had many within the crypto community concerned about its effect. Many NFT holders were worried about how the upgrade would affect the NFT space, not just its users.
The Merge NFT impact
A lot of positive things are to be expected after the Merge. According to the Ethereum Foundation, the update should lower Ethereum's energy consumption by 99%.
Switching to PoS means the blockchain will no longer rely on energy-intensive mining hardware. Instead, it will depend on validators to validate transactions.
Less energy demand means its users can finally mint and sell NFTs in a sustainable environment. Maintenance cost for NFT projects is expected to reduce significantly. The upgrade might also see more users use the protocol to mint and sell non-fungible tokens.
Many investors had previously avoided using the network due to its negative environmental impact. Blockchains using the proof-of-work consensus mechanism have been criticised, especially among environmentalists, for their high energy consumption rate.
In 2021 while still operating as a proof-of-work blockchain, some estimates of Ethereum's annual energy consumption found it to be around 26TWh, which was what Ecuador, a country of 17 million people, consumed a year.
With the network utilising the PoS consensus mechanism, investors who are kept away due to its energy consumption rate have no reason to do so.
Several NFT projects had declared support for the upgrade even before the Merge. OpenSea, the largest NFT marketplace, said it would only support the PoS blockchain after the update.
Not all ETH holders supported the update. Several network participants wanted the blockchain to remain a proof-of-work blockchain. There were concerns about hard forks that could lead to duplicate NFTs. OpenSea maintained it would not support any fork after the upgrade.
Yuga Labs and Proof also declared support for the upgrade. Proof also said it would not support or recognise any fork made post-merge. Yuga Labs is the creator of the famous Bored Ape Yacht Club, while Proof is responsible for the valuable Moonbirds project.
The projects' stand on the update helped clear a lot of confusion that would have arisen after the network upgrade, considering the possible rise of forks.
Ethereum's transition to a PoS blockchain enables it to make up where Solana and Polygon outshone it. The blockchains had staking as an advantage over Ethereum.
However, with the update, the blockchain has one less thing to work on (high gas fees) to continue to dominate the NFT space.
Author: Jay Jackson
Jay Jackson is a crypto trader, researcher and freelance writer. He works closely with people and businesses in the crypto sphere, writing blog posts, guides, press releases, reviews and ebooks.