“The Merge” — Everything You Need To Know

The cryptocurrency world has always been big on celebrating groundbreaking events and milestones. Bitcoin halvings, for example, are celebrated the world over by crypto enthusiasts. Of course, an immensely popular blockchain like Bitcoin is known to command such attention. Similarly, Ethereum, an equally popular blockchain, gets the buzz going with every significant development.

“The Merge” is one of the most talked about updates coming to the Ethereum network. It was proposed by Vitalik Buterin, the blockchain’s co-founder, all the way back in 2014. A long time coming and much awaited by the community, The Merge is set to be the biggest update in the network’s history. Expected to be implemented around mid-September 2022, the magnitude of this event has everyone waiting on the edge of their seats. The success of this update is sure to raise several toasts worldwide.

Why Ethereum Needs This Update

The update seeks to bring changes to the consensus mechanism that Ethereum’s security and integrity rely upon. The blockchain is currently powered by the Proof-of-Work consensus mechanism. Simply put, the confirmation of each transaction on Ethereum depends on network participants called miners. By providing processing power to solve cryptographic puzzles, they are given the opportunity to add the next block to the blockchain. These blocks contain a list of transactions whose validity is confirmed by other miners on the network. Upon successful validation reached through a majority consensus, the miner responsible for building the block is rewarded with Ethereum’s native cryptocurrency, Ether. Of course, the amount of processing power needed to power blockchain networks the size of Ethereum is severely detrimental to the environment. This is a huge red flag raised by PoW blockchains, especially when the world is moving towards technologies aligned with ESGs.

What’s About To Change

In 2014, Buterin published a blog post talking about the Proof-of-Stake consensus mechanism — how it is more economic and sustainable than PoW. The intent has always been to push Ethereum’s functioning to a PoS framework since genesis. The implementation of such a consensus mechanism will bring down the network’s environmental impact by 99.95%, an estimation provided by the Ethereum Foundation. PoS works on staking the native cryptocurrency instead of processing power, to earn a chance to create the next block. An algorithm helps decide the subsequent validator at random, who fills the subsequent block with transactions and adds it to the chain. Since there is no requirement for processing power for the block creation process, the PoS consensus mechanism is a highly sustainable approach to operating massive blockchain networks like Ethereum.

The Merge

In 2020, Ethereum revealed the Beacon Chain — the network’s PoS consensus layer. It was being operated in a siloed environment away from the main network. The chain has been tested and patched rigorously to provide an optimal infrastructure for the myriads of dApps that run on Ethereum when it makes the switch to this PoS chain.

The Merge refers to the switch in the network’s consensus mechanism as it moves from its PoW execution layer to its PoS consensus layer. The change in this mechanism has taken years to pull off due to the complexity involved. Achieving such a task is not easy. Prior to the eventual switch, the developers at the Ethereum Foundation introduced updates leading to the merging of Ethereum’s mainnet and the Beacon Chain.

These updates have successfully moved all Ethereum testnets like Ropsten, Sepolia, and Goerli to the Beacon Chain. The next update named Bellatrix will officially kick things off for Ethereum’s mainnet merging with the Beacon Chain. This update scheduled for September 6, 2022, will commence a process that will lead to The Merge a few days later.

The Bellatrix update is set to introduce a mechanism known as the difficulty bomb that will increase the difficulty associated with mining new blocks. At its culmination, the mechanism will increase the terminal total threshold, TTD, to 58750000000000000000000. Without getting too technical, TTD is a number that describes the moment at which it becomes impossible to mine a block. This will force the network to switch to the PoS consensus mechanism powered by the Beacon Chain causing The Merge. This marks the consequent update called Paris.

Misconceptions About The Merge

Of course, an update on the scale of Paris has a lot of people talking about it. Amidst all the excitement, a lot of rumors and misconceptions started making their rounds. Some of the popular misconceptions surrounding these updates are related to gas fees, transaction speeds, and chain downtime. Ethereum themselves addressed these misconceptions, offering clarity on what’s to be expected with the update.

The PoS mechanism is misconceived to offer more improvements to the network than security and sustainability. The gas fees for transactions on Ethereum will remain the same after the update. Likewise, the transaction speeds aren’t going to change either. These factors depend on the network size. The Merge will strictly switch the network’s consensus mechanism only, not expand the network size.

Of course, gas fees and transaction speeds come into the picture only when the network is up and running. Ethereum users are concerned, and some are convinced that there will be chain downtime during the Paris update. However, a smooth transition to the Beacon Chain can be expected once the last block is mined on the PoW execution layer. The developers have been preparing for this moment for a long time and the updates leading to The Merge have all been implemented to ease the process.

Ethereum After The Merge

The Merge, when successfully executed, will lead to further updates bringing a whole host of features. Although we are currently witnessing one of the biggest developments in blockchain history, it is just a stepping stone that will make the Ethereum ecosystem more scalable and secure. Future updates will introduce the likes of sharding to the network. When combined with the vastly developed layer2 rollup solutions developed around the network, sharding will help Ethereum achieve 100,000 transactions per second.

Ethereum’s switch to Proof of Stake will not only make the blockchain highly sustainable but also make it more efficient than most blockchains out there presently — offering the best of every world!