Home » What You Should Know About The Ethereum Merge
When it comes to the Ethereum blockchain, we can agree on a few things—gas fees are over the roof, Taxes are worrisome, and the transaction speed is slow. These are more than enough reasons for us to be concerned about the future of the network, especially with the likes of Solana gaining ground so quickly.
The developers have talked about moving to a more sustainable method for validating transactions for quite some time. This major update is known as the Ethereum Merge.
While the Merge is closer than we think, will it make gas fees cheaper or increase transaction speed? Will it come with a new Ethereum token?
We created this article to answer all these questions and more. Let’s get started.
The Ethereum Merge: What Is It?
The Merge is a major upgrade to the current version of the Ethereum protocol. This new update aims to improve the network’s performance by replacing its Proof-of-Work mechanism with a more sustainable Proof-of-Stake mechanism.
Proof-of-Work is the technical process used to validate transactions in the Ethereum network. In short, miners compete against each other to solve complex mathematical equations (known as proof-of-work), which allow them to earn rewards in the form of Ether.
In contrast, Proof-of-Stakes is a consensus algorithm that allows users to stake their coins and gain rewards based on the number of votes they cast. This means that nodes vote for the next block creator instead of competing against others to mine blocks. If your node has staked a sufficient Ether, it gets rewarded for voting.
What are the benefits of The Ethereum Merge?
The Merge intends to provide better security, scalability, and privacy while enabling smart contracts to run at higher speeds.
As such, the update will introduce changes to the following areas:
Smart contract execution speed
Transaction validation time
Data storage limits
Why is it called the Merge?
The developers chose the name “Merge” because it represents the merging of both PoW and PoS algorithms.
Ethereum developers had previously created a separate chain running on the PoS algorithm called the Beacon Chain. However, it has been running alongside the mainnet. So the merge is when the mainnet is merged into the beacon chain.
Will Ethereum 2.0 ever happen?
After years of expectations, the blockchain’s core developers have put a date to the event. According to core developer Preston Van Loon, the Merge will happen in August 2022 “if everything goes as planned.”
The merge is more than just a hard fork on the network—it’s basically creating a whole new blockchain on the PoS system. So, what does this mean for the existing Ethereum blockchain?
1. The Merge Will Create a Whole New Blockchain
As I said, ETH2.0 is more than just a hard fork on the network; it’s a paradigm shift. However, this doesn’t mean they’ll issue a new token, or older transactions will get lost (it is an immutable ledger, after all).
You can liken it to how your system upgrades to a new operating system to offer better features. You don’t lose any data, but instead, you access a new set of tools. In this instance, the tools are the Proof-of-Stake and a different sharding framework to improve scalability.
Furthermore, it’ll no longer use blocks to store transactions. Instead, it’ll use slots and epochs. A slot contains information about transactions and is presently set to last 12 seconds.
Blocks are added to a closet after a committee of validators certifies the correctness of blocks within each slot. Sometimes, slots can be empty.
Epochs are a collection of slots (currently 32). Once complete, the system reshuffles the validators in committees.
In order to make sure there aren’t any problems with the transition from PoW to PoS, the team has divided the entire process into three phases. Phase 0 will occur in August 2022, introducing the beacon chain and staking.
Then phase 1 will introduce the shard chain infrastructure to improve scalability, and phase 2 will be the final stage where accounts and transactions will be transferred to the new chain. It’ll also improve smart contract functionality.
The Ethereum Merge is a welcome development for the community as it’ll cut energy costs by 99%. Many reports suggest that it’ll push the token’s price to new heights.
However, the update will not tackle the issue of gas fees. That will come in phase 2, which is due in 2023.