Ethereum’s Merge is only the beginning, and it will need L2s to survive
For more than a year, the Ethereum Merge has been one of the most hotly debated and anticipated events in blockchain and crypto communities. Google searches abound with questions from, ‘will the Merge reduce gas fees’ to ‘will the Merge have a fundamental impact on the way NFTs are minted?’ to ‘what’s the point of Layer 2’s after the Merge happens?’.
This article aims to debunk the myths and give a few clear and concise answers to help you understand what’s really going on with the Merge, why it matters and what the future holds for Layer 2s and sidechains.
What is the Merge?
Although there are a lot of moving parts to the Merge, the basic synopsis is that Ethereum’s founder, Vitalik Buterin, and his cohorts, decided to move from a Proof of Work (PoW) to a Proof of Stake (PoS) consensus mechanism. This was done mainly for sustainability reasons.
With the Merge, Ethereum’s energy consumption has dropped by 99.9% — a coup for blockchain’s increasingly scrutinized environmental narrative. This is because the network has shifted away from the computationally intensive mining model, PoW, similar to Bitcoin, to the node validator model, PoS, increasingly preferred by blockchain builders.
This process has involved the ‘merging’ of the Beacon chain Layer 1 (L1) 1 PoS testnet with Ethereum’s PoW execution layer, or mainnet. These two networks ran side-by-side leading up to the Merge. This was to prevent the Ethereum network from breaking during switchover. Ethereum’s old PoW consensus mechanism has now been shut down forever.
But the belief that the Merge will radically increase Ethereum’s near-term scalability and that gas fees will be reduced is misguided. Although this has been an ambitious hope for the Ethereum community, the Merge was never designed to deliver these attributes.
The continuing case for Layer 2s?
One of the other pressing questions is whether or not these changes to Ethereum’s consensus mechanism would make Layer 2 solutions redundant. The short answer to this is ‘no, they won't’.
Despite Ethereum’s massive upgrade, the Merge is just one step in its unfurling roadmap. At the time of writing, according to Vitalik Buterin, Ethereum is only just past the halfway point in its development. Yet to come are The Surge, The Verge, The Purge, and The Splurge. Who said Ethereum developers didn’t have a sense of humor?
Still a long way to go
These milestones will, respectively, introduce additional scalability for rollups through sharding, bring statelessness through Verkle trees and accompanying features, get rid of bad debt and old data, and deliver added functionality that ensures all stages work smoothly together.
This process will take several years, and Vitalik Buterin himself has stated that even after sharding brings massive scaling capabilities to the Ethereum network, and even after Optimistic rollups are squarely in place, Ethereum will still need L2 solutions to meet its objectives and the growing demands of the community.
Importantly, with the Merge, Ethereum has given its fast-turning flywheel an extra jolt. With more L2s building on Ethereum to take advantage of its unparalleled security, and those L2s attracting more partners, particularly NFTs, Ethereum Name Service (ENS), and decentralized autonomous organizations (DAOs) spaces, the network will need all of the scaling power it can get. In short, L2s are precisely the partners Ethereum needs to sustainably grow.
What about sharding?
Many people mistakenly believe that when Ethereum introduces sharding — technology that will allow the network to exponentially increase computational throughput — the need for L2s will evaporate. After all, the point of L2s is to improve scalability issues through off-chain data compression. But what sharding will, in fact, do is provide new channels for L2s to deliver greater efficiencies by working in conjunction with them.
The growing needs of Web3
What is often overlooked is the scale Web3 will need to achieve to accommodate mass adoption. Even 100,000 transactions per second wouldn’t be able to meet truly global demand with the internet of the future. Scalability through L1 sharding and L2 off-chain data processing will be the key to Ethereum’s success.
Putting a finer point on it, every step taken down Ethereum’s roadmap will deliver added efficiencies to the L2s built on top of it. So, as Ethereum gets bigger, better, and more efficient, so will the L2 scaling solutions built on top of it.
What about sidechains?
With millions of transactions being handled by sidechains each day, they will also continue to have a part to play in Ethereum’s scaling narrative. However, sidechains remain contentious as they are inherently vulnerable to attacks.
Because they are not built directly on top of Ethereum’s L1 — unlike L2s, which are — the gap between their coded systems and Ethereum’s introduces a point of connection that can be pried open by dedicated hackers and exploited. In short, Sidechains don’t inherit the unsurpassed security of Ethereum but rely on their own security protocols which aren’t as robust.
Conclusion
Ethereum, after the Merge, is far from being the finished article as envisioned by Buterin. Optimistic rollups have long withdrawal times, which delivers a poor user experience, and sharding scalability solutions are years down the roadmap.
With new L1s delivering high transaction capabilities right off the bat — but still lacking the enviable level of security Ethereum boasts — the world’s leading Web3 network needs to deliver speed and cost-efficiencies for dApp developers and users now.
With the NFT and gaming markets growing at pace, even during crypto’s bear market, Ethereum needs to be ready to handle fresh surges in demand — which, in the world of crypto, could happen at any time — without clogging up and sending gas fees into orbit. The only feasible way to do this is through L2s running ZK-rollups like StarkEx, which means that L2s will be around for a long time to come.
Myria is an Ethereum L2 NFT and gaming solution and the ideal platform upon which to mint your project’s NFT collection. To take advantage of lightning-fast transaction speeds, unparalleled security, and zero gas fees, get in touch with the team today.
