The Ethereum Merge has occurred. Its purpose is to transition the blockchain from proof-of-work (PoW) to proof-of-stake (PoS), which is more environmentally friendly and presumably more secure (PoS). But what does this signify for holders of NFTs?
The Merge will not enhance network capacity, and gas prices are unlikely to fall, but the update may pave the road for lower gas payments in the future via sharding. According to experts, NFTs based on Ethereum won’t be unaffected.
According to Ankush Agarwal, the main architect of Co:Create, one implication to consider is duplicating NFTs.
“The ‘old NFTs’ will be [duplicated on any forked] PoW chain and could cause some confusion if projects are not updated. All major players — Coinbase, OpenSea, LooksRare — have made statements that they will only be supporting the PoS chain, so hopefully, the impact will be minimal.”
Ethereum’s proof-of-stake model alters the NFT energy narrative.
As a result of the Merge, Ethereum’s energy consumption lowers by 99.9%, which may have an impact on NFTs because it undermines the main narrative advanced by token opponents.
“There’s been an incredible amount of misinformation about the energy consumption of NFTs, but this migration will put even the most vocal critic’s concern to rest,” said Jonathan Victor, head of Web3 and NFTs at Protocol Labs.
According to Jack O’Holleran, CEO of SKALE labs, some of those critics include Hollywood personalities and game developers in San Francisco who are energy and environmentally sensitive.
SKALE’s multi-chain network works with companies and artists to mint and administers Ethereum-based NFTs. The first question major brands ask is whether their equipment is energy efficient, mostly because “they care about their optics,” according to him.
Ethereum has been generally characterized as an energy-inefficient environment, which has discouraged many from constructing NFT projects on Ethereum and instead going to other chains such as Solana and Polygon. Nonetheless, Ethereum is the largest and most widely used blockchain for NFTs.
Because most sectors are aiming for net zero emissions by 2050, the Merge might bring ETH much closer to this goal.
Victor stressed that this does not fix all of ETH’s problems: “If people want reduced gas fees, they’ll still need to use L2s like Optimism or Arbitrum.”
Meanwhile, NFT owners should be wary of hacks, frauds, and questionable links requesting crypto or NFT migration.