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September 2, 2022

The Implications of the Ethereum Merge on NFTs

As a result of the fork, Ethereum will switch from its current proof-of-work mining model, which needs a lot of distributed processing power, to a proof-of-stake consensus mechanism, which is predicted to use over 99% less energy, said the Ethereum Foundation. That’s a tremendous win for Ethereum and, more generally, for NFTs, as it removes one of the main arguments against them.

As was previously established, Ethereum’s core developers have been working on the merging for years, testing every step and ironing out any possible kinks. While that’s no assurance of a problem-free transition, it does indicate widespread optimism among developers and producers.

Eric Diep, co-founder of smart contract company Manifold, has remarked, “Ethereum is software, and all software suffers from the halting problem—that is to say, it is difficult to know with confidence whether there will be any technical snags.” However, I wouldn’t bet against ETH’s development community.

On the other hand, if the next mainnet update proceeds as planned, Ethereum NFTs should work as expected. You don’t need to take any action in advance of the combine; they’ll continue to reside in your wallet(s) and function normally on marketplaces. All of it is being taken care of by the development team to guarantee a smooth changeover.

Johnna Powell, NFT co-head of Ethereum-centric software startup ConsenSys, assured the community that users’ NFTs and ETH tokens will be stored securely on the new Ethereum [proof-of-stake] chain.

There is the emerging community agreement that the combined proof-of-stake chain is “officially” where Ethereum NFTs belong. Furthermore, signals are being sent by project developers and markets that they will only recognize Ethereum’s combined mainnet as authoritative, and that forked copies will be treated as such.

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Only those who hold their NFTs on the combined Ethereum proof-of-stake chain will be eligible for advantages inside Yuga’s communities, as revealed two weeks ago by Yuga Labs, developer of the Bored Ape Yacht Club and now owner of the CryptoPunks IP. Equally, only the rightful proprietors of such pictures may profit from their use in works that are themselves derivative.

In other words, Ethereum developers are certain that NFTs will continue to operate normally after the merging, that the hype surrounding duplicate NFTs on split chains will quickly die down, and that big markets and producers would not even acknowledge official copies on such forked networks.