{"id":874,"date":"2022-06-02T16:46:56","date_gmt":"2022-06-02T16:46:56","guid":{"rendered":"https:\/\/grandpascrypto.com\/?p=874"},"modified":"2022-06-02T16:46:59","modified_gmt":"2022-06-02T16:46:59","slug":"whats-going-on-with-the-falling-price-of-eth","status":"publish","type":"post","link":"https:\/\/grandpascrypto.com\/whats-going-on-with-the-falling-price-of-eth\/","title":{"rendered":"What\u2019s Going On With the Falling Price of $ETH?"},"content":{"rendered":"\n

tl;dr Summary: <\/em><\/strong>Ethereum\u2019s \u2018merge\u2019 from proof of work to proof of stake continues to inch ever closer. Despite this, $ETH fell by nearly 30% in the month of May. What is going on with the world\u2019s second biggest cryptocurrency? Few things: demise of $UST, bleak macro-economic outlook, Ethereum’s recent reorg, and uncertain dates of The Merge.<\/em><\/p>\n\n\n\n

The Ethereum \u2018merge\u2019 is highly anticipated in the crypto sphere. The move from proof of work<\/a> to proof of stake<\/a> is generally considered to be a bullish milestone, dramatically cutting energy usage and laying the foundations for highly scalable \u2018shard chain\u2019<\/a> implementation. Despite the upcoming merge, the price of $ETH slid 29% over the course of May.<\/p>\n\n\n\n

The demise of $UST<\/a>, combined with a bleak macro-economic<\/a> outlook joined forces to make May a brutal month in the crypto markets. Even so, Ethereum\u2019s losses were almost double those sustained by Bitcoin over the same period, when compared in percentage terms. It seems to many that Ethereum has severely underperformed given the hype around the upcoming merge, leading many to question what\u2019s going on behind the scenes?<\/p>\n\n\n\n

The Seven Block \u2018Re-Org\u2019<\/strong><\/p>\n\n\n\n

In late May, the Ethereum network suffered its longest re-org in many years. This did not cause serious consequences for network users, however highlighted a potential security flaw with regard to the merge. <\/p>\n\n\n\n

To understand the logistics of the re-org requires a basic understanding of how a blockchain works<\/a>. Re-orgs occur when network validators disagree on which block was last added to the blockchain, causing the network to fork into two parallel chains. Eventually, the validators form a consensus on which is the \u2018correct\u2019 chain, and continue to build upon that chain only. The number of blocks that are added to the \u2018incorrect\u2019 chain determines the severity of the event, and these blocks are rendered invalid.<\/p>\n\n\n\n

Short re-orgs of 1-2 blocks are common, occurring due to network latency. Although there are some negative connotations<\/a> of short re-orgs, they are generally not a big security risk. During a larger re-org, malicious actors are potentially able to exploit the fragmented network. This is done by attempting to transact on both parallel blockchains simultaneously, in what is known as \u2018double-spending\u2019<\/a>. This security vulnerability can potentially lead to large exploits<\/a>.<\/p>\n\n\n\n

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The Ethereum beacon chain experienced a 7-block deep reorg ~2.5h ago. This shows that the current attestation strategy of nodes should be reconsidered to hopefully result in a more stable chain! (proposals already exist) pic.twitter.com\/BkQrKuUlw1<\/a><\/p>— Martin K\u00f6ppelmann \ud83c\uddfa\ud83c\udde6 (@koeppelmann) May 25, 2022<\/a><\/blockquote>