• Ethereum completed its radical shift to a more energy-friendly system for powering its network in 2022.
• The Merge, the blockchain’s massive upgrade to a more energy-efficient system, cut the network’s energy consumption by around 99%.
• Concerns around censorship, record-shattering hacks, and the chain’s high transaction costs and slow network speeds were also prominent themes in Ethereum’s year.

In 2022, Ethereum made a radical shift to a new, vastly more energy-friendly system for powering its network. This monumental upgrade, known as the Merge, promised to reduce the network’s energy consumption by around 99% and marked the start of a new era for the blockchain.

However, despite the Merge’s successes, Ethereum’s year was also marked with problems. Censorship, record-shattering hacks, and the chain’s high transaction costs and slow network speeds were all prominent themes in Ethereum’s year, raising questions about whether the blockchain can ever truly become a global computer and decentralized financial system.

The Merge was Ethereum’s massive, years-in-the-making upgrade to a more energy-efficient system for processing transactions. The switch to proof-of-stake from proof-of-work was expected to drastically reduce the network’s energy footprint and put Ethereum on a path to becoming a deflationary asset.

However, the Merge also raised concerns about the blockchain becoming too centralized. Additionally, the event never spurred a long-hoped-for bump to the price of ether (ETH), the chain’s native currency, and the price of ETH has sunk more than 20% since the Merge.

Ethereum’s year was further marred by several other issues. Censorship concerns, record-shattering hacks, and the chain’s high transaction costs and slow network speeds all posed major challenges to the blockchain’s ambitions.

The censorship concerns stemmed from the blockchain’s new power structure, where validators „stake“ ether (ETH) with the chain for the chance to write transactions to its ledger. Meanwhile, the record-shattering hacks on Ethereum-linked infrastructure highlighted the blockchain’s susceptibility to malicious actors. In terms of transaction costs and network speeds, the Merge was unable to address these problems, leaving Ethereum still searching for solutions.

Overall, Ethereum’s 2022 was a rollercoaster of successes and challenges. Despite its progress toward becoming a global computer and decentralized financial system, the blockchain still faces significant issues that need to be addressed before it can reach its full potential.