ETH Merge: the dose you actually need
Another historic moment for our decentralized operating system, Ethereum, is full steam ahead and showing positive signs on its way towards it. The Ethereum merge is expected to occur around September 15th or more accurately when the total terminal difficulty(TTD) reaches 5.875*10¹⁹ which is currently 1.208*10¹⁶. This shows the total difficulty required for the final block mined in Ethereum on proof-of-work (PoW). In contrast to using the number of blocks to determine the last PoW block, TTD ensures that enough work has been on the last block rather than a malicious actor submitting large quantities of self-made blocks. As soon as a mined block reaches a difficulty of such magnitude, all blocks will be produced with the proof-of-stake(PoS) consensus mechanism.
Let’s dive more deeply into the technical magic of The Merge, after all this is the most complex upgrade the network has seen. Let’s understand it by taking into consideration the two layers of the network, the consensus layer and the execution layer. The Merge is a two-step process, it begins with the upgrade on the consensus layer with a slot height and then a shift of the consensus mechanism to PoS on the execution layer. On the execution layer, the TTD will function as a signal. When it reaches a certain level, all the node operators will upgrade to the new version.
In order, first, the Bellatrix upgrade will take place. This is the act of the beacon chain, i.e. the PoS chain currently running to accumulate capital for the security of the chain, being prepared for the upgrade. Then comes the Paris upgrade, where a TTD will be announced on the completion of Bellatrix signalling node operators to ready themselves for the Merge. As soon as that TTD is hit, the client listens for the block produced and from then on all the blocks will be produced with the PoS consensus mechanism. The TTD can fluctuate based on the volatility of the proof of work consensus so an error of one week is acceptable. As a holder of ETH, you don’t have to worry about anything. The mechanism by which coins are transferred changes not the coin itself.
Still didn’t get it, let’s simplify it more. Imagine yourself building a multiple-story apartment. You are the mason working on the top floor while the labourers are providing you with all the raw materials from below. Once you reach the floor height that is not suitable for the labourers to deliver the materials by hand, you shift your strategy. That is, the specific height of the building led you to announce that a change has to occur. Similarly, a slot height is agreed upon on the consensus layer and a TTD is announced for the execution layer to change its strategy. The labourers get a pully and an elevator and it’s sunshine and rainbows from here; you get the perfect cryptocurrency. Well, not quite so.
Ethereum uses proof-of-work to achieve security which is done through the use of expensive hardware such as GPUs and ASICS. You might be mining on Ethereum for one of the two reasons:
- Supporting the cause and getting your skin in the game
- Making money out of it
In both of these cases, you are incentivized as a part of the network. You are getting rewarded for each block mined. So, obviously, there would be a higher proportion of people mining for the latter reason. Also, you would love to get the ETH value even if you were supporting the cause.
In most third-world countries, mining has been a source of income for most people. Miners produced $620M worth of Ether in July alone. Depriving the miners of such an income stream will not let them rest in peace. A view of Bitcoin mining:
A major shift spurs propaganda, for the better or the worst, and mainly because of conflicting views. Now, such a big event concerning the 2nd largest cryptocurrency won’t settle without any backlash. Ethereum Classic(ETC) was created as a hard fork to stand against deviation from the principle code is law. Some greed along with manipulation and some stood for the betterment of the network. ETC rose to be a cryptocurrency upholding the primitive Ethereum. A historic event that, at that time, was also regarded as useless by the developers and ardent supporters of the forked Ethereum. This, the supporters of PoW on Ethereum, the miners, have risen to fork Ethereum with the emergence of EthereumPOW claiming it inevitable. This idea has gained traction because Chandler Guo, a China-based miner, openly supports forking Ethereum, saying “I fork Ethereum once, I will fork it again”.
In addition to this, the controversial TRON founder, Justin Sun has emerged as an investor who will back ETHPOW by donating some of the 1 million ETH his company has. He also announced USDN to be the first stable coin on the forked ETH chain. In addition, Poloniex, the exchange known to have initially supported ETC, will also support the forking of Ethereum and will list ETHW.
On the other side, however, Vitalik has openly stated that the emergence of another hard fork is unnecessary and is only backed by people who want to make a quick buck. He explains that for miners, Ethereum Classic is present as a better product to absorb the hash rate. It has been established for quite a long time and he sees it as superior to any hard fork now. In addition, Circle’s USDC and USDT have announced their full support for the PoS Ethereum which is pivotal for the success of Ethereum considering the large market capital of stable coins and their robust use cases. Chainlink has also come forth to support the PoS version of ETH stating that this decision is aligned with the broader Ethereum community and the Ethereum Foundation.
The network is run by people. These people act as miners to secure the decentralized ledger. People have irrationality ingrained in them. Coming up with illogical conclusions is inevitable like the fork is. A binary shift of paradigm that upholds something as big as Ethereum is surely not possible. Vitalik underestimated the success of ETC when it emerged. A similar claim can be seen here. However, the donation received by the EthereumPOW in its address also does not paint a bright picture. A total of approximately 0.7ETH, $11,000 worth of USDT, and a bunch of other small tokens have been donated. Kevin Zhou, co-founder of Galois Capital, famous for predicting the LUNA death spiral has come forth with the statement that a hard fork is surely going to happen. Miners would want their stake in the future of Ethereum. He expects three forks. The infrastructure is already present on ETH and a forked version could get the developers it needs.
Time can only tell how his saga will unfold. This surely will be a historic moment for the coming future of decentralized protocols, something that would be recorded for others to seek guidance and build on. Whether a fork exists or not, money shouldn’t be lost. That matters.
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