If you want to know what Ethereum merge is, you’ve come to the right place. In this guide, we’ll tell you when the ETH merge is and what happens before it.
In addition, we’ll list the main advantages and disadvantages of the ETH merger. You’ll also find out everything about its upcoming updates.
What Is the Ethereum Merge?
The Ethereum merge is a term that refers to a radical change in the consensus mechanism of the Ethereum network. It involves the transition from PoW to PoS consensus.
The Ethereum mainnet is merging with the beacon chain. The first term refers to Ethereum’s main blockchain, while the second refers to the main element responsible for the PoS consensus application.
The goal of the merger is to:
- reduce energy consumption by 99.95%,
- increase scalability, and
- enable faster transactions.
The Ethereum merge also replaced mining with staking. Namely, while PoW consensus is based on the process of obtaining mining rewards, PoS consensus is founded on staking. Every person who stakes 32 ETH becomes a validator.
In addition to that, this transition enabled upgrades that work only on the PoS consensus mechanism.
Why Is It Called the Merge?
The Ethereum development plan includes six stages — the merge, the surge, the scourge, the verge, the purge, and the splurge. The term “ETH and ETC merge” refers to the first phase of development — the transition to PoS consensus.
According to the people behind the Ethereum Foundation, “the merge” is a metaphor for “changing the engine of an airplane in mid-flight.” This term was chosen because it describes the merger of two parallel chains into one.
Why Is the Merge Important?
The merger is important because it will lead to a more scalable, secure, and sustainable network.
What’s more, proof-of-stake consensus will enable sharding. This means that validators will be able to divide the ETH network into smaller parts of the blockchain instead of validating the entire chain. Sharding will reduce data storage, which will allow users to run the crypto network from a mobile phone.
Furthermore, the merger will affect the speed at which the network distributes new rewards, and it will reduce energy usage by 99.95%.
And finally, the merge will make the Ethereum network more accessible to new users as it will replace mining with staking. This means that there will be no need to use expensive mining rigs. On the contrary, anyone who stakes 32 ETH will be able to become a validator.
The History of the Ethereum Merge
Now that we’ve got the Ethereum merge explained, here’s how it came about.
The Merge and the Beacon Chain
Ethereum blockchain entered the crypto world in 2015. Like Bitcoin, Ethereum used PoW consensus. However, a year later the DAO hack happened, which prompted a change in the Ethereum ecosystem.
The DAO, or decentralized autonomous organization, is a project that was launched in 2016 and was financed by the sale of tokens. The DAO managed to become one of the most successful crowdfunding campaigns in history. It managed to raise $150 million ETH. However, since it was an open-source program, hackers were able to break into its code and steal more than $60 million worth of Ethereum.
This prompted Ethereum developers to upgrade their network. This upgrade plan started with the transition from PoW to PoS consensus. The transition started on September 6th, 2022 at 11:34:47 am UTC. The Ethereum Foundation confirms merge completion a few days later, more precisely on September 15th, 2022.
The merge took place in two phases called Bellatrix and Paris. The first refers to the consensus layer and the second to the execution layer.
And who is Ethereum merging with? The beacon chain. The Beacon Chain was first separated from the Ethereum mainnet. After both components merged, the PoS mechanism replaced the PoW consensus.
The Merge and the Shanghai Update
When will Ethereum merge again? It won’t. Namely, after the merge, the Shanghai upgrade — also known as the Shapella upgrade — was implemented. With this, the transition from PoW to PoS consensus was finalized.
The Shanghai upgrade happened on the 12th of April 2023. It included a combination of two upgrades — Shanghai and Capella. This Ethereum merge update enabled the withdrawal of staked ETHs.
The Merge and Sharding
The next phase in Ethereum’s roadmap refers to the surge that started in 2023. The main goal of the surge is to improve the scalability and capacity of the ETH network through sharding. Sharding is an upgrade that divides the network into smaller parts that can process transactions individually.
This upgrade is also designed to help decentralize the network by allowing more nodes to process transactions.
Pros of the Merge
The merger brought the following improvements to the Ethereum blockchain:
ETH’s transition from PoW to PoS consensus led to a reduction in electricity consumption by 99.95%. This means that ETH now generates less carbon. This is good for both individuals and businesses. Namely, companies invest in Ethereum without worrying about breaking sustainability regulations.
This will also motivate investors to start funding Web3 projects that are based on the ETH blockchain.
Since PoS consensus doesn’t require the purchase of expensive hardware, the number of validators on the network will increase. This will also strengthen the security of the ETH blockchain.
Merge contributed to the increase in the number of validators. After the Shanghai upgrade, this number increased by almost 50%. That said, the Ethereum network currently has 861,000 validators. A larger number of validators means a more stable and decentralized network.
The sharding upgrade may improve the network’s scalability since it will enable a greater number of transactions. Moreover, this upgrade will reduce data storage requirements, making the validation process more efficient.
The Ethereum merger may also lead to a decrease in the total supply of ETH. This can encourage people to buy ETH, which can result in an increase in its market value.
Cons of the Merge
Potential risks that could emerge after the merger are:
Ethereum miners may decide to create a fork to continue making money on the network. This can harm the company’s reputation. The merger may also lead to a reduced influx of new coins since mining rewards will no longer be paid out.
Staking rewards in the PoS consensus are given according to the value of the investor’s position. This could cause disparity between validators, where wealthier individuals would have more control over the network.
Will ETH 2 Replace ETH?
According to Vitalik Buterin, the founder of Ethereum, ETH 2 will not replace ETH — rather, it will become part of the same chain. In other words, ETH holders will not lose their coins after the merger. Instead, they’ll be automatically transferred to ETH 2.
ETH 2, which is also called Serenity, is not a new network. Serenity is an upgraded version of the Ethereum network that works on PoS consensus instead of PoW. Another significant difference between ETH and ETH 2 is that the former bases its operations on 64 new chains, instead of a single blockchain. This will make it easier to start nodes.
What’s more, due to shrad chains, Serenity is expected to support around 100,000 transactions per second.
What is the Ethereum merge and how does it affect the network overall?
Ethereum’s merge from PoW to PoS was the event of the year. It made big changes in the ETH ecosystem. The goal of the merger was to enable a faster, more scalable, and more energy-efficient network.
This also means that the ETH mining process has become a thing of the past, as miners have been replaced by validators.
The merger was followed by the surge, an upgrade created to improve the scalability and capacity of the Ethereum blockchain, while the four remaining phases of network development are yet to be announced.
What does the merge mean for Ethereum?
Is the Ethereum merge a good thing?
Is the ETH merge bullish?