Privacy-focused Gnosis, one of the first sidechains to Ethereum, will conduct its own version of the Merge to replace its proof-of-authority (PoA) chain with its Gnosis proof-of-stake (PoS) beacon chain. The Merge will take place on Thursday, Dec. 8, when a certain predetermined Total Terminal Difficulty (TTD) is reached. While TTD is a measure that has typically been used for proof-of-work (PoW) blockchains, it can be used to time the fork for PoA chains.
This will be the second-ever “Merge” event in blockchain history, following the Ethereum blockchain’s Merge in September when it switched out its old PoW model for PoS. This time, however, the Gnosis “Merge” will be slightly different given that it is swapping out PoA for PoS.
Why switch from PoA to PoS?
PoA uses validators to add blocks to the blockchain. But instead of staking assets (e.g., Ethereum stakes ETH) under PoS, validators stake their “reputation,” meaning they need to meet certain requirements to be trustworthy and remain in good standing.
Since PoA depends on the reputation of the validator's identity, validators go through a complex process to ensure that “bad” validators are not included. This mechanism solidifies the system’s integrity and verifies that the participating validators are all reliable and follow the same rules.
Like PoS, PoA is already a less-energy-intensive consensus mechanism compared to PoW because there are fewer computational resources needed to deploy validators. However, PoA is much more centralized than PoS because only a select few validators are approved to participate on the network by a group of “authorities.” The authorities make the validators go through a rigorous pre-approval process, and they ensure these validators adhere to a set of requirements and check that transactions are not tampered with when adding them to the blockchain.
After Gnosis runs through the Merge, it will go from having fewer than 20 validators running the blockchain to over 100,000, making it the chain with the second-most number of validators after Ethereum.
“In the trilemma of scalability, decentralization and security, we focus on decentralization,” Stefan George, the co-founder and chief technology officer at Gnosis, told CoinDesk. “Contrary to many ‘Ethereum killers,’ which favor scalability over decentralization, cheap blockspace is a commodity whereas decentralized blockspace is a scarce resource.”
First Ethereum, now Gnosis. Who’s next?
Ethereum developers have said they hope the protocol’s switch to PoS would encourage others to retire their old models and move to staking, either for energy efficiency or centralization reasons.
“We were delighted to see that the Ethereum Merge was successful and also had increasing confidence that we can apply the Merge successfully to Gnosis Chain,” George said.
The success of Ethereum’s Merge confirmed that such a complex undertaking can be done, and encouraged the Gnosis Chain developers in their efforts to complete their own Merge.
“Initially, the goal was to do the Merge on Gnosis Chain before the Merge of Ethereum to show that it can be done safely on Ethereum,” George told CoinDesk. “It turned out to be more complicated on Gnosis Chain as we were not switching from PoW but PoA and had to customize the existing code.”
The Ethereum Merge has also inspired other chains, such as Dogecoin, to look into potentially switching away from their PoW models.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.