On September 15th of last year, Ethereum, the world&'s second-largest cryptocurrency by market capitalization, embarked on a historic journey that would redefine its future. The occasion marked the implementation of the much-anticipated Merge upgrade, an event that has had profound implications not only for Ethereum but also for the entire blockchain space. This upgrade signaled the transition from the energy-intensive proof-of-work (PoW) consensus mechanism to the more sustainable proof-of-stake (PoS) mechanism, and its impact has been nothing short of revolutionary.

A Greener and Deflationary Ethereum

The most significant change brought about by the Merge upgrade is the transformation of Ethereum into a more environmentally friendly blockchain. Prior to the upgrade, Ethereum relied on PoW, which required miners to solve complex mathematical puzzles, consuming enormous amounts of computational power and electricity. The transition to PoS, however, eliminated this energy-intensive process. Instead, validators are chosen to create new blocks and validate transactions based on the amount of cryptocurrency they "stake" as collateral.

The environmental implications of this shift have been remarkable. According to recent data from the Ethereum analytics dashboard, Ultrasound Money, Ethereum has burned a staggering 980,377 ETH since the Merge upgrade while minting only 680,455 ETH. This stark contrast has led to a reduction in the overall supply of Ethereum by nearly 300,000 ETH, making it a deflationary currency. This reduction in supply can have positive effects on the value and scarcity of Ethereum, potentially influencing its long-term price trajectory.

Increased Staking and Reduced Gas Fees

Another milestone achieved since the implementation of the Merge upgrade is the significant increase in staking activity within the Ethereum network. Currently, more than 22% of all ETH in circulation is staked by validators. Staking involves locking up a certain amount of cryptocurrency as collateral to participate in the consensus process and receive rewards in return. This surge in staking reflects the growing confidence of Ethereum holders in the PoS mechanism and its ability to secure the network efficiently.

While the Merge upgrade itself did not directly impact gas fees on the Ethereum network, it is worth noting that gas fees have remained relatively stable, averaging around 24.9 gwei. This stability is an encouraging sign for Ethereum users, as it ensures that the cost of executing transactions and smart contracts remains predictable and affordable, especially in comparison to the often unpredictable and high gas fees associated with PoW-based networks.

A Radical Reduction in Energy Consumption

One of the most remarkable achievements of the Merge upgrade is the drastic reduction in Ethereum&'s energy consumption. Prior to the upgrade, Ethereum&'s PoW mechanism was notorious for its energy-intensive nature, often drawing criticism for its environmental impact. However, with the transition to PoS, Ethereum has slashed its energy requirements by a staggering 99.99%.

Under the PoS mechanism, a percentage of the transaction fees collected from users is burned, effectively removing Ether from circulation. This process not only helps to reduce the overall supply but also aligns Ethereum with a more sustainable and eco-friendly future. Validators in the PoS network are compensated with a priority fee, or "tip," that users add to transactions to incentivize validators to prioritize their transactions. Meanwhile, the base fee is consumed, further reducing the circulating supply of Ether.

Celebrating Ethereum&'s Milestones

In light of these incredible achievements, it is no wonder that the Ethereum community and industry experts are celebrating the milestones reached since the Merge upgrade. Ethereum researcher "Sassal ETH" aptly summed up the accomplishments of the largest smart contract network in the world. Since the upgrade, nearly one million ETH have been burned, over 11.6 million ETH have been staked, and a remarkable 362,000 new validators have joined the network. These numbers reflect the Ethereum community&'s commitment to sustainability, scalability, and innovation.

In related news, recent data and reports indicate that Ethereum is not only thriving but poised for even greater heights, thanks to a surge in on-chain activity and growing optimism within the cryptocurrency community.

Historic Daily Active Addresses

According to a report by the market intelligence platform Santiment, Ethereum has witnessed a remarkable surge in daily active addresses for its native cryptocurrency, ETH. On 13 September 2023, Ethereum recorded a staggering 1,089,893 daily active addresses. This surge represents the second-highest daily active address count in Ethereum&'s history, with the highest count previously recorded on 9 December 2022, coinciding with ETH&'s retest of its post-2021 bear market losses.

The significance of this milestone cannot be overstated, as it reflects a growing and engaged user base within the Ethereum network - demonstrating that more individuals are actively using and transacting with ETH. This increased user activity can be interpreted as a positive sign of Ethereum&'s adoption and utility as well.

Ethereum Overtakes Bitcoin in Daily Active Addresses

Perhaps even more noteworthy is that Ethereum has now surpassed Bitcoin (BTC) in terms of daily active addresses. Data from Artemis Terminal indicates that Ethereum boasts an impressive 1.03 million daily active addresses, while Bitcoin lags behind with 743,800. This shift in the number of active addresses may signify a shift in user preferences towards Ethereum, potentially driven by its unique capabilities and the vibrant ecosystem it offers.

Record-Breaking Daily Transactions

The surge in Ethereum&'s on-chain activity does not end with daily active addresses. Data from Etherscan reveals that the Ethereum network recently set a new all-time high for daily transactions. On 13 September 2023, Ethereum recorded a staggering 1,627,860 transactions in a single day, eclipsing the previous peak recorded on 17 September 2020, which reached approximately 1,406,000 daily transactions.

This surge in transaction activity is indicative of growing interest and enthusiasm within the Ethereum community. It showcases the network&'s capacity to handle an ever-increasing volume of transactions, reinforcing Ethereum&'s position as a versatile and scalable blockchain platform.

Potential for Enhanced Market Volatility and Recovery

Analysts at Santiment suggest that the surge in on-chain activity could pave the way for enhanced market volatility. While Ethereum has experienced recent market instability, with its price dipping below the $1,700 threshold, there is an underlying sense of optimism. The increased activity on the Ethereum network, coupled with its strong fundamentals, suggests the potential for a recovery for ETH.

Despite market fluctuations, Ethereum remains a vital player in the decentralized finance (DeFi) ecosystem and the broader smart contract space. It currently boasts approximately $20 billion in total value locked, highlighting its enduring relevance and significance within the cryptocurrency landscape.

Price Overview

Meanwhile, data from the cryptocurrency price tracking website CoinStats indicated that ETH was still trading below the $1.7K mark at $1,641.29 at press time. This was after the altcoin leader posted a 24-hour gain of 0.56%. Notably, the positive daily performance had also given ETH’s price a boost on its weekly timeframe. Subsequently, the cryptocurrency was up 0.39% over the past 7 days as well.

Price chart for ETH (Source: CoinStats)

ETH was also able to outperform BTC in terms of 24-hour price performance. At press time, the leading altcoin was up 0.6% against BTC. This meant that 1 ETH token was worth around 0.06168252 BTC.