The Merge — a quick overview
The ETH 60% monthly gains are a clear sign that the market is paying attention.
Don’t forget that people buy the rumour to sell the news, so don’t go all crazy on ETH just now…NFA.
The Merge is expected to take place in September, but no one would bet on it because of the numerous past delays.
PoW to PoS
As you know, Ethereum is switching to a Proof-of-Stake consensus mechanism.
One important aspect is that Ethereum is not becoming a full Proof-of-Stake Blockchain. Rather, it will use proof-of-stake as a mean to verify transactions that will be recorded on the proof-of-work execution layer base.
The proof-of-work base of Ethereum is a promise of safety, and the Ethereum network needs the OG, 6 inches steel doors, triple locked, movement detector, laser guarded security that is Proof-of-work — compared to other consensus mechanisms.
But, this security is coming at a cost that has become too high to pay. Ecologically and financially. Even though the ecological argument is a bit narrow-sighted, since it has to be compared to other worldwide industries, its essential that we optimise the technologies of the future. And for the financial aspect, we’ll see that it’s not going to change right now.
The Merge
That is why it’s called like that, it is not a fork, per se.
The blockchain won’t change, and that is why there is no new token. NO ETH2.0 TOKEN, don’t fall for scams.
Hence, the name ETH2 was dropped.
Transactions, dapps and smart contracts remain as is, written onto the original PoW blockchain. The difference comes for validating new transactions, these will go through a new network of validators on the Beacon Chain, instead of miners.
It’s like upgrading for an highway automatic payment system like the SunPass instead of queuing at the toll. You change the tech while remaining on the same road.
Do you need to do something ?
Nope.
The Merge is no threat to your assets and you don’t have to redeem anything.
Layer 2
A natural question to ask would be “What is going to happen to all these projects that were supposed to solve ETH problems if these problems disappear?”
Well, not much is set to change right now, and the need for L2 solutions is still extremely relevant.
Actually, The Merge won’t directly affect gas fees and throughput. These are still a function of demand and the network’s ability to manage it. The industry’s consensus is clear, a better Ethereum blockchain is good news for every project built on top of it.
Scalability will not come has a direct effect of The Merge. In fact, it will come from the broad adoption of Layer 2 blockchains and the integration of rollups and sharding onto the Ethereum Blockchain.
The Triple Halvening
Ethereum’s community came up with this notion to hype ETH advancements in the headlines and put it into perspective with well known events like the BTC Halvening.
BTC’s block rewards are halved every 4 years or so. By switching to PoS, Ethereum is expected to pass from injecting roughly 4% of new tokens annualy to only 0.4%.
BTC will get to this rate in 12 years, which corresponds to 3 halvenings, hence the name.
Final thoughts
Don’t be too surprised if “nothing changes” after The Merge.
It’s a stepping stone for a better version of Ethereum, more adapted to the times we live in. The cheaper gas fees and faster transactions will come later.
This bear market offers a fair share of great upgrades and exciting news, we might dive on Cardano’s achievements next week.
Thanks for reading,
Take care.
Join Coinmonks Telegram Channel and Youtube Channel learn about crypto trading and investing
