A Quick Overview of the ETH Merge and The Hype Around It

Ethereum Merge is one of the most highly anticipated events in the blockchain industry this year. When it comes to the Merge, true believers consider the shift from proof of work to proof of stake a leap for the industry. The change in the consensus mechanism replaces nodes with validators. The upgrade aims to increase the network’s capacity to process more transactions per second.

What Changes?

Since April 2022, Ethereum has been running two parallel chains, PoW (Mainnet) and PoS (Beacon chain). The unification of Mainnet to Beacon Chain is the first step toward a broader set of solutions. This upgrade will make Ethereum eco-friendly by reducing energy consumption by 99.5%.

After the Merge, only Beacon Chain will be responsible for the issuance of ETH. This means ETH will become scarce, which will increase its demand. Validators who attest blocks will be rewarded. The rewards will accrue and be made available later. People who stake will be incentivized to remove their earnings once ETH is made available (post-Shanghai update).

What Does Not Change?

There are speculations around the impact on gas fees, however, the Merge focuses on change in the consensus mechanism, which is directly related to capacity. The gas fee depends on the network traffic. Similarly, the speed of transactions will also not be impacted right away, but the upgrades later could lead towards it.

When Is It Happening?

On September 6, the Bellatrix upgrade was completed, which prepared the Beacon Chain for the Merge. The next up is the Paris upgrade required to complete the Merge. The upgrade is scheduled between September 15–17.

How Can it Impact the Rest of the Ecosystem?

The improvement in Ethereum’s network is being labelled as historic as it could pave the way for mass crypto adoption. The carbon footprint left by high computational power has been a point of contention among critics. It is the first big step towards a greener solution for the technology. Other blockchains mostly use proof of work mechanism. The success of the Merge will set a precedent for other chains to move towards a solution that reduces energy consumption.

What’s Next?

The upgrade to Ethereum 2.0 is a multi-stage process. The first stage is the Merge (PoW to PoS) which would be followed by sharding Ethereum (dividing data into smaller sets horizontally to spread the load across the network). The upgrade is tentatively scheduled for 2023, but it will depend on the execution of the merge and development journey down the road.

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