5 Misconceptions about the Merge
The word ‘merge’ would have popped severally on your social media feed or twitter timeline most especially if you are a crypto enthusiast or an NFT trader/collector. The word that would happen to be an event has the entire crypto space anticipating, one of the most significant process in the evolution of Ethereum, although not so many people quite fully understand the meaning of this process, yet it is simply known that Ethereum is moving from a proof-of-work mechanism to a proof-of-stake consensus, but what does that really mean?
The Merge
As it stands, the Ethereum Main net relies on a proof-of-work consensus layer, which uses a lot of computational power and consequently consumes a lot of energy. Bitcoin was the first to use proof of work, which relies on mining to resolve extremely difficult computational puzzles. Technology does, however, constantly improve, and this is where the proof of stake comes in. Where does Ethereum in into all of this, though? The Ethereum chain is one of the most widely used chains in the blockchain industry, and it processes a large number of transactions because it is used by many decentralized apps and protocols that are active on the main net. It would require a great deal of processing power (energy) to process all of the transactions in a queue, which is a general issue. The proof-of-stake mechanism, on the other hand, merely solves this difficulty, making networks operate with significantly less resource use. The Merge is therefore the transition of the Ethereum chain from a proof of work layer to a proof of stake consensus layer.
The Misconceptions
The Merge is among the blockchain community’s most highly anticipated events, and almost everyone is interested in what lies ahead after the event. However, I think the reason for this is because there are misinformation about the merge going around. I’m sorry to burst your bubbles, but the Merge will impact the space but not in the way you thought it would.
Misconception #1: “The Merge will reduce gas fees.”
The gas fees on the Ethereum chain could occasionally be a little too absurd, so this has everyone in the cryptocurrency space really happy. It is reported that the merge will result in low gas prices, but the merge is actually just a tweak in the consensus mechanism and won’t result in lower gas prices. The level of network demand in relation to the network’s capacity determines gas prices, and the merger does not change this. As a result, the Merge won’t lower gas prices.
Misconception #2: “Transactions will be faster after The Merge.”
Although only when you increase your gwei, Ethereum transactions have been reasonably quick, which is a concern given the network’s demand; nonetheless, the merge is not intended to address this issue. Although there could be a few minor adjustments, following the Merge, transactions won’t likely move any more quickly. The “speed” of a transaction may be measured in a number of ways, including the time it takes to finalize and the time it takes to be included in a block. Both of these modifications are small, but not enough for users to notice.
Misconception #3: “Staking APR will be 3x after The Merge.”
This is not uncommon though, as anytime a new Layer 2 chain or subnet is launched, staking APRs are often out of this world. One may easily come across APRs of 300 percent or even more, and many people feel that this will also happen to their staked Ethereum ($eth). Unfortunately, it won’t, but it doesn’t imply that staking APR won’t rise significantly; it will, just not by the enormous margin that most people think it would.
Misconception #4: “You can withdraw your staked ETH post-Merge.”
The vast majority of cryptocurrency enthusiasts are aware of this, especially the DeFi gurus. Earned rewards before or after a chain’s birth are frequently locked; for certain protocols, the rewards are partially locked, while for others it is always completely locked. The Merge won’t make a difference in that regard. With the Merge, withdrawals will not be possible immediately.
Misconception #5: “Stakers will exit, once withdrawal is enabled”
This is another another misconception that has not only become widespread but has also led to some ambiguity regarding the Merge. People are starting to speculate about what will happen after the Merge and question if it will entail an increase or decrease in Ether’s price. Although it is difficult to predict, the consensus is that Ethereum’s value will drop because stakers will all exit the cryptocurrency once withdrawals are permitted. There will be measures to control the entry or exit of validators on the chain because the proof of stake consensus layer depends on the validators, who also happen to be stakers. If all the stakers leave or the majority of them, who will validate the transactions, we will only be back where we started from.
Additionally, the idea that you need to stake 32 ETH in order to operate a node is likewise untrue; anybody may run a node using either the proof-of-work or proof-of-stake consensus mechanisms, and all users are highly urged to do so if they have the resources. The decentralization of the Ethereum network cannot exist without everyone having the capacity to run their own node.
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