"The Merge is Done! Now What? VC Firms Have Long Backed AI. Now, They Are Using It."

"The Merge is Done! Now What? VC Firms Have Long Backed AI. Now, They Are Using It."

The recent merge from Proof of Work to Proof of Stake in Ethereum has brought about significant changes in the network. With a 99.5% reduction in energy consumption and a 90% lower inflation rate, Ethereum is now running more efficiently than ever before. However, the merge is only the beginning, and there are still several challenges that need to be addressed.

One of the challenges is scaling Ethereum's computing capacity without compromising security and composability. Sharding technology seems to be the solution here. By splitting the database into smaller shards and processing the information using separate machines, Ethereum can increase its computing power. The implementation of sharding strategies is still being debated, but future Ethereum Improvement Proposals (EIPs) like EIP-4844 are expected to provide valuable insights into this matter.

Another challenge that arises with a full sharding implementation is the exponential growth of Ethereum's state. As the state grows, it becomes increasingly expensive to maintain a record of it on every validator. To address this issue, Ethereum is looking to move towards a stateless network validation system. This involves shifting from the current Merkle-tree-based validation to a newer concept called "Verkle Trees." Verkle trees compress the data required to prove the validity of a block based on historical data, making stateless clients viable in practice. This shift will significantly increase processing power and allow the historical record to expand without bogging down the network.

In addition to the technical advancements, Ethereum is also focusing on improving the user experience. One such improvement is the reduction of historical data that needs to be maintained by execution clients. Instead of needing the full history, clients will only be required to maintain one year of data. This reduces the burden on clients and allows for more efficient operation.

While these advancements are crucial for the development of Ethereum, it's essential to consider the broader implications of emerging technologies. One area where technology is making a significant impact is venture capital. VC firms have long backed AI, but now they are also utilizing it in their investment decisions. Correlation Ventures, for example, uses a machine-learning tool to determine whether to invest in a company. This tool analyzes factors such as team experience and board composition to predict future investor returns. AI is projected to be involved in 75% of venture capital investment decisions by 2025, indicating a significant shift in the industry.