In this article, I will try to explain in the simplest terms what will be happening during the Ethereum blockchain merge. This won’t be a technical text at all. Instead, I’ll try to keep it as simple as possible, so you can have an idea and keep researching this topic if you want to.
The merge is one step closer to a faster, more scalable, efficient, and cheaper network. Although all this will not be immediate, this is a necessary step within planning from the very conception of the blockchain.
Today, Ethereum is a Proof of Work chain (like Bitcoin) and will become a Proof of Stake. We will have no more miners and replace them with validators. In a future article, we could explain what it means to be a validator.
But we already have a Proof of Stake chain on Ethereum, and this chain is called “The Beacon Chain.” This is a consensus layer with no dApps; we can start to see how it works when we stake ETH to validate transactions and secure the network. Up until now, the beacon chain has been running in parallel with our “well-known” Ethereum blockchain, and the Merge is nothing more than the union of both networks with the consequent deactivation of the POW version, remaining unified in POS and starting the path toward Ethereum 2.0
But this is by no means the only implementation we will have towards Eth 2.0. We already had the EIP 1559, which dramatically changed how fees were administrated and drastically reduced ETH supply. Today, Ethereum does not have a max supply, and neither will it, but if we consider burning and emission reduction, it could even become deflationary.
I highly recommend you go to https://ultrasound.money/ where you can run various simulations and see how eth supply would behave under different scenarios.
So, by now, there is enough consensus among Ethereum developers that the merge will be happening next September. They have already activated the difficulty bomb for this date, causing the POW chain to slow down to incentivize the transition further.
The difficulty bomb is code developed in 2016 that rapidly increases the difficulty of mining a block on Ethereum, eventually making it economically infeasible to mine ETH using the PoW protocol, incentivizing miners to turn off their GPUs
At the moment of this writing, 2 of 3 Ethereum Test nets have successfully transitioned to POS. First, it was Ropten, and during the first days of July, it was Sepolia. The third one, Goerli, is expected to happen on August 11th, and probably two weeks after that, we could have the Ethereum main net transition.
After the merge, what?
It has been said many times that the merge itself does not reduce fees or add scalability, but without it, everything that comes after wouldn’t be possible. And this is where it gets good. Once the fusion is completed, the shard chains can be deployed, and in this way, the Ethereum network extends to 64 blockchains. This process aims to divide the blockchain horizontally to distribute the load, reduce network congestion and increase transactions per second.
With shard chains, validators only need to store and execute data for the shard they’re validating, not for the entire network. By the way, do you see yourself validating from a mobile phone? Well, this is where we are heading. Scalability and security.
All these changes will take time, in the meantime we also have a thriving layer 2 ecosystem, blooming as you are reading this line, with solutions like Optimism, Arbitrum, and ZKSync. Even our well-known Immutable X, with their NFT specialized gas-free platform, could be added to this list. Ethereum layer 1 is going to get faster and cheaper, but over time, and if we want to have a blockchain that enables millions and millions around the world to use it with very cheap fees, and instant transactions, we will still need layer 2s.
These second layers are where most retail users will live, transact and perform their everyday activities. The Ethereum layer 1 scalability plan is not supposed to be completed without the layer 2 and layer 3 components.
Most of the time we are so focused on short-term price appreciation, and we are always looking for the next shiny thing, but we should never forget where the real value lies, and in the Ethereum ecosystem they seem to be just starting.
Brought to you by: @Nacho
Check out some more of Nacho’s writing at: https://criptogaucho.com/
Nacho is a writer for The Pulse. He is mostly involved in NFTs, Bitcoin and Ethereum ecosystem. Freedom advocate.
ModSquad for the Impact Theory Discord and admin for The Pulse
Building The Pulse.
