If you have been following allowing the journey of Ethereum’s progress from a Proof-of-Work (POW) chain to a Proof-of-Stake (POS) chain, you would likely know that one of its largest milestones, “The Merge” has been announced to happen on September 15th, 2022 as of this article’s publish date.
So what is The Merge, and what will happen as a result? I will answer the questions related to The Merge below:
What is The Merge?
Simply put, The Merge is the joining of the ETH1, the Ethereum Mainnet that we use today, which will be the execution layer in the proof-of-stake ETH, with ETH2 the Beacon Chain, the new proof-of-stake consensus layer. With The Merge, the terms ‘ETH1’ and ‘ETH2’ will no longer be used, since there are no longer two networks of Ethereum.
The Beacon Chain was already shipped by the Ethereum Foundation separately from Mainnet which we use today. The Beacon Chain is currently using proof-of-stake to secure accounts, balances, smart contracts, and blockchain state while Mainnet is doing the same with proof-of-work. With The Merge, these two separate chains are being joined together and proof-of-work is being replaced by proof-of-stake.
With The Merge, Ethereum permanently changes from a proof-of-work model to a proof-of-stake chain that eliminates miners from mining new blocks to operate Ethereum to instead have validators that have staked ETH, validating blocks to continue operating Ethereum.
What happens to my ETH?
As an Ethereum holder, nothing happens to the ETH you own. Since all of the information on Ethereum will remain the same even after the change from POW to POS, you do not have to do anything with your ETH to keep your funds safe.
Instead, be careful of scammers that may try to take advantage of this situation and ask you to send your ETH to an account to make sure it transitions to the POS Ethereum. I repeat, your ETH will automatically become proof-of-stake.
When could I withdraw my staked ETH?
I am sure some have already staked their ETH to secure the Beacon chain and are curious as to when you can unstake your ETH with your rewards. Unfortunately, The Merge will not include the feature to withdraw staked ETH. You will have to wait until the Shanghai upgrade to withdraw your staked ETH.
What happens to ETH miners?
In short, ETH miners are now obsolete.
However, one group, spearheaded by an influential Chinese miner, [NAME] proposed a fork of the current Proof-of-Work Ethereum, and keep the Proof-of-Work chain operating. Another Institutional miner Hive Blockchain Technologies stated it might revert to mining Ethereum ****Classic (ETC). Ethereum Classic is the original Ethereum chain where due to the infamous DAO hack in 2016, the Ethereum Foundation hard forked Ethereum to revert the funds lost from the hack. That hard fork became the Ethereum we use today, and the original chain became Ethereum Classic.
Those in favor of the suggested hard fork look to what happened with Ethereum Classic. Even though only a few dApps and a small number of developers work on ETC, it is still valued at a market cap of about $5.3 billion. ETC has been going up in price as The Merge approaches because many investors believe that many miners may dedicate their computing power to the network once it’s no longer needed on Ethereum.
What happens to stablecoins on Ethereum?
Tether has announced that they plan to provide support to Ethereum after The Merge. Circle, the issuer of USDC, announced that they will fully and only support the Ethereum proof-of-stake (PoS) chain post-merge.
