
The crypto
industry is excited about “the Merge.” The Merge already took place, and
proponents say it could increase prices in the long run and significantly change
the future of cryptocurrencies. Here is a look at the important things you need
to know about the Merge.
What Is the Ethereum
Merge?
The Merge of Ethereum
Merge as it is referred to is an upgrade to the Ethereum blockchain. Ethereum
is the blockchain behind the second largest cryptocurrency and other
technologies in the crypto landscape, including non-fungible tokens (NFTs). There
will be a change in how crypto transactions take place on the Ethereum
blockchain after the Merge.
Before the
merge, the Ethereum blockchain runs on the Proof-of-Work (PoW) model. With the
upgrade, Ethereum will be transitioned to the Proof-of-Stake (PoS) model. The
PoS model is a more environmentally-friendly and energy-efficient system.
Read more: Proof-of-Stake explained
When Did the Merge
Happen?
After several
delays, the Ethereum Merge finally took place on September 15, 2022, as tweeted
by Vitalik Buterin, the co-founder of Ethereum. The transition, according to
proponents, enables the Ethereum network to lower its energy consumption by
almost 99%. The Bitcoin network uses the PoW model, which requires a lot more energy
than the PoS model.
Crypto
transactions harm the environment, and this has been top in the mind of
advocates and critics alike. PoS is less energy-intensive, and Ethereum’s
upgrade is seen as a significant advance. This shift will also lay the foundation
for other elements of the network's roadmap, like improving transaction
efficiency.
Why Is It
Called a Merge?
Ethereum has a
PoS network known as Beacon Chain. Beacon Chain was introduced in 2020. The
full transition of Ethereum to PoS requires the merge of Ethereum’s PoW Mainnet
(the “Execution” layer) with Beacon Chain (the “Consensus” layer).
The Merge
represents the formal deployment of the Beacon Chain as the new consensus layer
to the existing Mainnet execution layer. With the Merge, mining on PoW will not
remain a valid means of producing blocks, and validators will be assigned to
secure Ethereum Mainnet.
Instead, blocks
will be proposed through the validation of nodes that have ether staked to earn
the privilege to take part in consensus. Improvements like these set the stage for
later scalability upgrades, such as sharding.
Will Ethereum
Fees Reduce After the Merge?
The Merge is
not expected to change Ethereum transaction fees. Ethereum’s high network fees
may be addressed by future network updates like proto-danksharding and
danksharding. However, these updates at the earliest won’t be available until
2023.
Rollups remain the main salve of the transaction fee of
Ethereum. Rollups are third-party networks like Optimism and Arbitrum that
group together transactions and carry out their processing outside of
Ethereum's Mainnet.
What Is
Ethereum’s Roadmap After the Merge?
Just as they
did before, Ethereum’s core developers will continue to work on the open-source
network after the Merge. Improvements to security, speeds, and network fees are
slated for the coming months and years.
Post-merge,
sharding is one focus for developers. Sharding aims to decrease Ethereum fees
and expands its throughput by spreading network activity across several
“shards.”
Enshrined proposer builder separation (PBS) is also
on the roadmap. With PBS, the "builders" who add transactions to
blocks will be separated from the "proposers" who submit them for
network-wide approval.
Conclusion
The Ethereum Merge has already happened. Eagerly
anticipated by the crypto community, proponents say we should expect changes in
the price of cryptocurrencies in the months ahead.
DISCLOSURE
Comments here are not of the author's opinion. Users are responsible for their comments.