After the Merge: Aya Miyaguchi on Ethereum and blockchain’s future
September 15, 2022 will go down as an important day in the history of blockchain and decentralised ledger technology.
That’s the day the new Ethereum was born, with the popular blockchain network moving to a Proof of Stake (PoS) consensus mechanism, eliminating once and for all the need for energy-intensive computational processes to keep the network running.
For Ethereum Foundation Executive Director Aya Miyaguchi, who was in New Zealand last month visited with the Web3 community, and Callaghan Innovation, ‘the Merge’ as it was known, fulfilled Ethereum founder Vitalik Buterin’s vision for a blockchain that had a much more sustainable environmental footprint than the Proof of Work system that underpinned Ethereum and which still powers Bitcoin.
Ethereum Foundation Executive Director Aya Miyaguchi
“The shift from proof of work to proof of stake was something that Ethereum promised from the very beginning. But for a lot of people it didn’t sound realistic,” says Miyaguchi, who is an Edmund Hillary Fellowship Fellow and used her visit to New Zealand to catch up with the organisation and colleagues.
The Ethereum Foundation hosts and supports a number of programmes dedicated to development of the core ‘layer 1’ Ethereum blockchain, but also works with groups developing applications running on Ethereum.
As such, the Merge was a massive programme of collaboration, possibly the largest to date in the blockchain space, bringing together thousands of people in the Ethereum community from all over the world.
“It was a technical shift, and a very hard one to make, because thousands of applications were already running on Ethereum,” Miyaguchi explains.
“The analogy of overhauling the engine while the plane is flying, really does apply.”
A beautiful moment
The decentralised nature of that community, as well as the technology it uses and develops, meant getting to the Merge took a long time. The fateful moment was celebrated with a massive video call.
“I normally don’t join the calls because I’m not a core developer, but they invited me and it was kind of a beautiful moment,” Miyaguchi remembers.
“We woke up the next day and everything was still working. It was very smooth.”
The 99.95% energy efficiency improvements touted ahead of the merge have been achieved, she says.
“It has completely shifted to not relying on large amounts of electricity for the securing network. All you need is personal computer-level energy usage to run a node.”
But she’s realistic about what this major technical project primarily accomplished - “restoring the balance” between technological innovation and environmental sustainability.
“We shouldn’t compliment ourselves too much,” she admits. “We eliminated a part that was really negative. Now we can actually make the world a better place, we can feel good about building things on this.”
The Merge happened as the crypto sector languished in the doldrums, with the market capitalisation of all crypto currencies deeply depressed and the collapse of high-profile projects such as the Terra Luna stable coin shaking the confidence of investors, developers and ordinary users alike.
Now, Miyaguchi says, the focus is on helping developers all over the world work to build applications that run on Ethereum, offer tangible benefits to people, and which will thrive as confidence in decentralised applications and organisations developing them revives.
Why we need decentralisation
“Hype overtook the industry,” she says.
“We’ve been through it before, so we are not so worried about it. But there is a big shift globally. The financial system is not working, we see that. It's why we need decentralisation, not to destroy banks or the existing system, but we have to admit that the system isn’t really working.”
The focus for Ethereum’s further technical development is tackling the issue of scaling. Because every node on the blockchain network has to be verified for each transaction, it's hard for the network to handle a high volume of transactions. The result for Ethereum users has been slow transaction processing and high ‘gas’ fees at times of peak usage of the Ethereum network. It’s not a problem restricted to Ethereum - the challenges in supporting rapidly growing usage of Blockchain networks while retaining security, is a universal one.
Post merge, developers are working on solutions, including supporting Layer 2 protocols that interact with the main Ethereum blockchain but handle higher volumes of transactions off-chain.
“Part of the merge work included progress towards better scalability. But there needs to be more work done. In the meantime, layer 2 is happening,” says Miyaguchi, who prior to joining the Ethereum Foundation was the Managing Director of the Kraken Bitcoin Exchange for Japan.
Miyaguchi used her time in New Zealand to scope out community projects, such as the Wellbeing Protocol, which ran a successful pilot project in Cannons Creek, Porirua, using a decentralised autonomous organisation (DAO) to let community members allocate resources to projects and make payments for locally bought goods and services.
“The big benefit I see is that New Zealand is a small country. There is a lot of experimentation with smaller-scale projects and the community can work together closely,” says Miyaguchi.
The Ethereum Foundation has funding programmes to support development of blockchain use cases. It runs a fellowship programme, issues grants and supports education initiatives such as hackathons and the annual Ethereum event Devcon.
“The support we give isn’t just financial. If developers need guidance, we can share similar use cases. Our team members are helping different regions to experiment. Whether it's on the city level, or community level,” Miyaguchi says.
She sees particular scope for Aotearoa to pioneer uses of the blockchain that incorporate indigenous knowledge and promote Māori social and environmental projects. Despite continuing uncertainty related to crypto projects, Miyguchi said developer appetite is strong and the fundamental mission of the Ethereum Foundation
“Interest hasn’t disappeared. When the market is calmer, we see the ones that are interested and actually understand it,” she points out.
“The goal is to have use cases that improve your life. You shouldn’t need to think about whether it runs on Ethereum. What has gone on in the world in recent years is a reminder for us of why we need decentralised systems.”
Visit the Ethereum Foundation to find out more about its work around the world.