This month, an event in progress – a fundamental change in the way one of the most popular blockchains works, rumored for so long that some doubted it would ever happen – is finally scheduled to happen.
If carried out successfully, it would address the aspect of NFTs that is perhaps the most difficult for fashion brands to justify: the enormous amounts of energy used by the Ethereum blockchain on which most NFT collections are built, a fact that it has been impossible for brands to live up to their publicized efforts to reduce their energy and carbon footprints as the world faces a climate crisis.
What is “Union”?
Currently scheduled to begin on or around September 15, the “merger” will see the Ethereum blockchain switch from its existing proof-of-work mechanism to a more efficient proof-of-stake system. Currently, whenever there is a transaction on Ethereum, computers compete to validate it by racing each other to solve complex equations, requiring tremendous processing power, but giving a reward to the winner.
The new system will do away with this competition and instead involve investors “staking” ether – the native currency of the Ethereum blockchain – into a pool, entering them into a lottery that will select one for to validate the transaction and claim the reward.
Why does it matter to fashion?
The amount of electricity proof-of-work blockchains like Ethereum and Bitcoin being swallowed is extremely large. Researchers have estimated that, as of July 2021, Ethereum used more electricity annually than Romania and slightly less than Switzerland. Its annual carbon emissions were slightly less than Tunisia’s. (Bitcoin’s impacts were even greater.)
The merger is supposed to reduce energy use by more than 99 percent.
For many fashion companies with Ethereum-based NFTs, such as Adidas, Nike and Gucci, there is a lot at stake for their sustainability credentials.
Adidas, for example, landed at the top of a list highlighting the environmental impact of fashion NFT projects due to the release of 30,000 NFTs “Into the Metaverse” last year, far more than the typical NFT release from fashion brands. At the same time, the sports giant says it is “committed to decarbonisation by reducing our absolute energy consumption and GHG emissions”.
Adidas said in a statement that it has tried to mitigate its impact by monitoring its emissions, taking steps such as minimizing unnecessary and intensive blockchain transactions and reinvesting profits in non-profit organizations “focused on advancing sustainability in the metaverse “. It added that its carbon emissions related to web3 activities represent approximately 0.05 percent of its total carbon footprint and that it continues to seek to reduce the figure.
How bad are trendy NFT projects for the environment?
It is difficult to measure the impact of any NFT collection. Because of the way blockchains work, there isn’t a simple one-to-one relationship between the number of transactions and total energy usage, as noted by the University of Cambridge.
One argument is that it is more accurate to think of an individual NFT as a passenger on a train rather than a car on the road. Each passenger contributes to the overall demand that keeps the train moving, but it is difficult to calculate what share of the train’s energy use and emissions each passenger owns. However, it cannot be denied that Ethereum uses a lot of electricity from carbon-emitting networks, prompting criticism of the trend’s dive into NFTs.
Some brands have tried to avoid these issues by using other blockchains. Gap’s NFT collection earlier this year was built on the Tezos blockchain, which operates on a proof-of-stake mechanism. Gap noted that it is more energy efficient than the labor-intensive systems underlying Ethereum and Bitcoin.
Why don’t more NFT projects use other blockchains?
Even if it has ceded market share to rivals this year, Ethereum remains by far the preferred blockchain for NFT projects. Since it emerged in 2015 with the goal of providing a more flexible network than Bitcoin, it has become the leading blockchain for developers building all kinds of applications beyond coins. Today, Ethereum-based NFTs tend to command higher selling prices and are supported by larger NFT markets, making them attractive to brands and their customers who may want to resell their digital assets a day.
In theory, the merger will allow Ethereum to continue as the blockchain of choice for many NFT projects, while allowing the creators behind them to claim that they are using an energy-efficient infrastructure. However, it is a complex and complicated process. If something goes wrong, any application running on Ethereum can face major disruptions.
“It’s flying the plane and changing the engine in the sky,” said one critic New York Times.
But those overseeing the Ethereum blockchain clearly think the risk is worth it.
Will fusion do anything besides reduce energy use?
The promised benefits don’t end with the fact that Ethereum is less of an energy hog. It should also make Ethereum more scalable and set the stage for updates to make it faster. (Don’t expect noticeable changes in performance right away, though).
The idea for the merger was born even before Ethereum debuted in 2015, and programmers have now been working diligently for years to make it happen. Despite the many delays, it now looks set to come to fruition. If indeed it happens, the dramatic energy savings will be a bright spot at least in the struggling crypto market, and will likely give trendy businesses one more reason to believe there is a long-term future for their ambitions. their web3.
