“The Merge” Explained: From Newbie to Nerd in less than 10 Minutes
If you still haven’t heard of Ethereum’s biggest update, THE MERGE (read with a Darth Vader voice)…
First, how fun was your extended digital detox retreat?
Second, more seriously, don’t worry. We’re here for you.
Ride with us on this brand new 5 articles series that will make you an expert of what THE MERGE entails for the Ethereum network and, more extendedly, the web3 space.
First stop: The Merge Explained.
This article will get you to be the most knowledgeable and interesting blockchain nerd at your next best friend’s birthday party. In less than 10 minutes of your precious time.
It’s happening this week (The Merge, not the birthday), so let’s dive right into it and feed this hungry brain of yours NOW.
So, what is THE MERGE?
Before entering into the technical details, let’s start with a bold statement: The Merge is an event that will, for better or worse, mark the History of web3 and the blockchain technology.
The Ethereum Network has been a major actor of the development of this space, right behind the still undisputed king Bitcoin.
Therefore, as The Merge will be Ethereum’s most transformative update, its execution and the consequences of this event will be a turning point of how web3 will impact the world.
The main purpose of The Merge is to transition from Ethereum’s current consensus mechanism, the proof-of-work, to the proof-of-stake model.
Roughly speaking, the network is currently secured in the proof-of-work model by miners, that use sophisticated machinery and enormous quantities of electricity to do so.
By switching to a proof-of-stake consensus, the security of the network will now be in the hands of validators, who will only need to “prove” that they have staked a certain quantity of Ethereum in order to validate the network.
This will reduce tremendously the energy consumption needed to keep the network running (we’re talking 100 to 1000x less energy needed), and open the door to Ethereum’s next big update coming in a few years: Sharding. More on that later.
Still following? Good.
We now know that The Merge is a profound change on the Ethereum’s Network, and that it has two main objectives:
- In the short-term, it will make it extraordinarily less energy consuming. This is a very seductive asset for the mainstream audience and business companies to consider entering the network.
- In the long-term, it prepares the field for other massive upgrades of the network that will this time aim to considerably reduce transaction fees and increase transaction speed.
If the vision behind this huge update is loud and clear, we need to understand at least one essential thing before we can choose to root for it or not.
How does The Merge work?
What if The Merge fails?
With approximately 1M ETH circulating every day, and hundreds of thousands daily active Ethereum wallets, modifying the network’s core system is a very risky business.
If severe problems occur, and users lose even a share of their staked and/or active currencies, the trust in the Ethereum network and cryptocurrencies as a whole will be firmly broken.
But that’s no news for the Ethereum researchers and developers, that wisely took precautions to avoid a potential crypto apocalypse.
Since December 2020 they have used an alternative Ethereum layer, the Beacon Chain, that acts as a playground to test every possible functionalities and outcomes of the planned switch from proof-of-work to proof-of-stake.
There are two main reasons for this :
- Making sure everything runs correctly and doesn’t harm the state of the Network, allowing a safe and smooth transition.
- Triggering that transition without stopping the Network from functioning, would have disastrous effects, especially regarding DeFi, if Ethereum transactions suddenly stopped for even a short period of time on the blockchain.
The Beacon Chain is the destined layer that will replace the current proof-of-work consensus. Yet until now, it has been used as a testnet to make sure everything will work according to plan when it is set to become the main protagonist.
The Merge, highly anticipated as it is, has been prepared with enough caution that we can safely assume that risks of complete failure are not the most expected outcome.
Is it completely safe though?
Absolutely not.
This is why we’ll be there when it happens, right by your side, to witness the outcome of this unprecedented event in the web3 space.
How can you prepare for The Merge?
Of course, even though we will witness The Merge and its consequences altogether, different people will expect different things.
The elephant in the room: PROFIT is a huge one.
How to profit from The Merge?
As the event approaches, numerous speculations and strategies are being shared in the crypto space.
If that is something that interests you, this will be the topic of the second article of this series, coming up tomorrow. Stay tuned!
Another reason why The Merge is of interest for so many web3 users: Technology.
The open source and decentralized spirit of the web3 space is what seduced millions of users in the first place. Ethereum, especially through its creator Vitalik, is a crucial part of that vision.
Will the proof-of-stake adoption support this vision, or burn it to the ground?
Once again there is much to talk about regarding the potential outcomes from The Merge, positive and negative, and we’ll tackle these later during this week.
Finally, let’s repeat it again to close this first article : History is happening.
Who wouldn’t want to be there, in the first rows, witnessing either the greatest change or the biggest catastrophe that the crypto world has seen so far?
Exciting times are up ahead, and whether we end the week in awe or in tears, seeing it all happen in front of our eyes will have been worth it anyways.
And voilà!
You have now a clear overview of what THE MERGE is, what is at stake, and which impact it can possibly have on the web3 space.
Follow us without hesitation as we will go even deeper into the matter in the upcoming days (yes, Sharding too), and be sure to leave a comment to let us know what you think!
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