- Cardano CEO Charles Hoskinson highlights Ethereum after the merger.
- Charles also pointed out some weak points of Bitcoin.
Charles Hoskinson, the creator of Cardano, has highlighted the weak points affecting the Ethereum Protocol after the historic Ethereum merger.
According to Charles, the main issue facing Ethereum is the lockout mechanism that prevents investors from withdrawing their staked Ether from the Beacon chain until the next upgrade is complete.
In an interview with a cryptocurrency news outlet, Hoskinson stressed that “Ethereum is the Hotel California of cryptocurrencies. You can check in, but you can’t check out.”
According to Charles, he believes that the updated mechanism greatly affected the liquidity of ETH and could ultimately lead to a liquidity crisis.
Charles noted: “You will have less and less Ether trading in the market.” He said: “And then what will ultimately happen is you will have a liquidity crisis where a lot of volatility will come in.”
Hoskinson also criticized the proof-of-work mining mechanism that powers Bitcoin, which he deemed useless in terms of long-term success.
Although Charles accepted that PoW (Proof of Work) is essential to develop a new Bitcoin, he also believed that it is effective when using BTC as a financial instrument.
Hoskinson noted that once BTC is mined, it could be moved to a different blockchain that consumes less energy in the form of wrapped assets.
“That other network could use it for stablecoins, it could use it for DeFi loans, it could use it for payments. Everything you want.”
Framing this article with benchmark data from CoinMarketCap’s largest digital asset, Bitcoin is trading at $19,125.73 on 24-hour volume of $26,869,033,780.
And while framing this article, the second crypto industry leader Ethereum (ETH) is trading at $1296.50 on 24-hour volume of $8,095,871,840.
Why did a lot of Ethereum miners go offline?
But the Ethereum upgrade did not deliver satisfactory results because more than 80% of Ethereum miners went offline after the merger. Although Ethereum Merge is between the historical moments of the crypto market and before the merger, there were many assumptions that the upgrade can reduce gas fees and increase transaction processing speed due to the mechanism of changing from PoW to PoS ( proof of participation).
An Ethereum Classic miner, TheCrowbill, stated: “I’m mining at a loss, it will probably be that way for some time.” The transition in the Ethereum network on September 15, 2022 removed proof-of-work (PoW) miners from the network in favor of proof-of-stake (PoS) validators.
Additionally, this move reduced Ethereum’s power consumption by 99.8% and prompted miners to take mining hardware worth an estimated $5 billion offline.