A recent report by the Enterprise Ethereum Alliance (EEA) highlighted that the Ethereum ecosystem has matured to the point that enterprises can use it to solve real-world problems . From supply chain management use cases to payment solutions used by companies like Visa and PayPal, the report illustrates how the Ethereum network has grown into one of the most valuable public blockchains.
While notable, the EEA report also notes that the rapid growth of the Ethereum ecosystem presents a number of challenges for enterprises, particularly in terms of energy consumption, scalability, and privacy. For example, the document states that “along with transaction fees, sustainability is seen as one of the main concerns related to the use of the Ethereum mainnet.” The report further explains that transparency associated with public blockchains such as Ethereum has always been Barriers for businesses seeking data security and trust.
As such, upgrades such as sharding and layer-2 (L2) scaling solutions remain critical for enterprises using the ethereum network. However, the complexities behind such implementations remain overwhelming for enterprises. For example, the EEA report states that "many L2 solutions and sidechains are relatively new projects employing relatively new technologies. They do not necessarily have the track record or the security and stability of the mainnet."
Merger Will Change How Businesses Think About Ethereum
However, industry experts predict that the ethereum merger, scheduled to take place around September 14, could boost enterprise adoption. EY Global Blockchain Leader Paul Brody told Cointelegraph that while the merger won’t affect most enterprise use cases currently in use, it will change the way businesses view ethereum. He said:
“Competing L1 networks have been talking for years about how Ethereum couldn’t get the merger done. Ethereum’s incredible organizational maturity has been working very well in the background in a careful and professional manner. As a business, that’s exactly what The organization that I want to see matures."
Although the merger has been in development for several years, Brody explained that upgrades to mission-critical infrastructure should never be rushed. As such, he believes this will remain a key point for businesses using the ethereum network. “I don’t think future efforts to deny Ethereum will last long in the post-consolidation era,” he said.
While it’s too early to tell how businesses will react to the merger, Robert Crozier, chief architect and global head of blockchain at Allianz Technology, told Cointelegraph that his firm will monitor the progress of the ethereum merger to see how it makes certain Use cases are stabilizing.
It’s worth noting that, as Crozier shared, Allianz only considered Ethereum and Ethereum-based use cases for small-scale experimental purposes. The insurance giant is currently using Hyperledger Fabric and decentralized ledger platform Corda to streamline the cross-border auto insurance claims process across Europe. Crozier added:
“At Allianz, our international auto claims settlement product uses Hyperledger Fabric at its core. We need to recognize and trust that other protocols like Ethereum will bring similar benefits in terms of ease of use, scalability, and finality.” the benefits of."
With these benefits in mind, Brody explained that the merger will ultimately lead to better scalability and privacy for businesses. "I think we are entering a new era of enterprise applications. As scalability and privacy mature, it will be possible to fully address enterprise process needs in the future."
In response, Ivan Brakrac, senior strategist for decentralized finance markets at ConsenSys, told Cointelegraph that while the merger will not directly improve scalability, a series of upgrades planned for Ethereum will address scalability issues in the coming years.
For example, Brakrac explained that transitioning the ethereum network from proof-of-work (PoW) to proof-of-stake (PoS) is the first step towards a “sharded chain.” As previously reported by Cointelegraph, sharding is the division of a database (in this case, the blockchain) into multiple smaller chains (called shards).
"This will reduce network congestion and increase transaction throughput," Brakrac said. This is key to adoption, and as Brody shared, EY's corporate clients look at supply chain applications that need to support 2-20 million transactions per day. “Ethereum before the merger couldn’t meet that need,” he said.
On the privacy front, ConsenSys released a report on September 5 titled “The Impact of Mergers on Institutions,” which mentioned that L2 solutions can also address privacy concerns for enterprises. The addition of L2 will unlock stronger privacy mechanisms for commercial use cases.
For example, Brody explained that EY developed a zero-knowledge proof L2 scaling solution called Nightfall to handle Ethereum gas limits and keep fees low. Brody said that multiple robust L2 networks will provide different options for businesses that may need more gas fees and larger transactions. He said:
"Privacy is starting to unlock a larger set of use cases for enterprise users. For example, instead of minting a token that represents a batch of products with origin information, I can mint a token for each inventory, which I can then pass on ether A multi-company network on the shop floor manages specific supply chain inventories."
In addition to scalability and privacy, sustainability issues will also be addressed once the merger is realized. According to Brakrac, ethereum currently uses an excess of electricity, noting that the merger would reduce energy use by 99%. “In the long run, this will make ethereum very sustainable. By design, this further secures the network and addresses environmental concerns, which is a net positive from an institutional adoption standpoint,” he said.
In fact, industry experts believe that the sustainability efforts involved in a merger are critical to enterprise adoption. EEA executive director Dan Burnett told Cointelegraph that while L2 and sidechains provide mitigation on sustainability issues, large organizations with environmental, social and governance goals are often reluctant to build on Ethereum due to environmental unsustainability. Build the solution. However, he noted that with these issues resolved, the merger could allow the ethereum business ecosystem to leap forward.
Yorke Rhodes III, the co-founder of Microsoft Blockchain, further told Cointelegraph that for companies such as Microsoft that are very conscious of their environmental impact, the merger would remove a major concern.
“This removes one of the key arguments that businesses make when evaluating whether to build a solution on the ethereum mainnet,” he said. Regarding Rhodes’ point of view, Crozier mentioned that moving to a more environmentally friendly proof-of-stake mechanism means that some enterprises, such as Allianz, will re-examine Ethereum.
The effect is not immediate
Taken together, the merger could boost corporate interest in Ethereum due to the growth of the Ethereum network. Furthermore, Rhodes believes that removing key criticisms of sustainability will encourage more businesses to move to the ethereum mainnet, even if only as a secure base layer. "As a critical step in realizing Ethereum's vision, the Ethereum merger lays the groundwork for early and closer scrutiny by businesses," he said.
It should be noted, however, that the benefits of the merger commitment will not be immediately apparent. According to Brody, after the merger, it will take at least 12-24 months before a privacy-enabling use case can be established. He said:
"I would like to see pilots by the end of the year, but it will take time for the feedback loop and infrastructure to mature. Unlike consumer apps, enterprise buyers have little patience and reluctance for products that don't work on the first try Try. Enterprise users are usually more conservative, so this cycle will be longer than consumer users.”
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