The Ethereum merge is the process of joining Ethereum’s existing layer (proof of work) with the new layer (proof of stake): the Beacon chain. The purpose of the merge is to improve Ethereum’s efficiency by reducing its power consumption by 99% and enabling the ETH ecosystem to scale further.
What are the new and old Ethereum layers?
Proof of Work (PoW)
The original layer of Ethereum is called Proof of Work (PoW). The system is the first method in crypto history used to validate blockchain transactions. PoW provided a way to confirm transactions on the blockchain without the involvement of any middlemen, such as financial institutions.
PoW is a process of adding new blocks to a cryptocurrency’s blockchain. The “work” in PoW is achieved by generating a hash (a long string of characters) that matches the target hash for the current block. Proof of Work has strong security but a heavy environmental impact due to the energy consumption.
Proof of Stake (PoS)
Proof of Stake (PoS) is a newer method of validating blockchain transactions. It is an alternative to Proof of Work that is far more energy efficient.
PoS allows owners of cryptocurrency to stake their crypto and create their own validator nodes. Staking is the process of ‘locking’ your cryptocurrencies, similar to a locked savings account with a bank. When a transaction is ready to be processed, the cryptocurrency’s proof-of-stake protocol will choose a validator node to review the transaction.
When will the Ethereum merge happen
The Ethereum merge has experienced several delays. It was originally set to launch in 2019 but was postponed for 2020. In 2020, it was postponed again for April 2021, only for it to be delayed yet again.
The ETH merge finally occurred on September 15, 2022.
Why was the merge delayed?
Over time the Ethereum team has faced many challenges. Making the merge come to life needed to be done as close to perfect as possible. This required the team to do a lot of revision on their coding and to fix any problems they faced.
The team also experienced conflict in 2021 which further affected the rollout of the merge.
Ethereum merge timeline
The merge was first announced by Ethereum founder, Vitalik Buterin, in 2016 and occurred over a span of almost 3 years from 2020. The merge was delayed a whopping number of 6 times!
This Twitter thread by Marty Bent shows updates of the merge since 2017.
Will the Ethereum merge reduce gas fees?
Unfortunately, the merge will not reduce gas fees (transaction fees). The Ethereum Foundation clarified this on their website.
“Gas fees are a product of network demand relative to the capacity of the network. The Merge deprecates the use of proof-of-work, transitioning to proof-of-stake for consensus, but does not significantly change any parameters that directly influence network capacity or throughput.”
In the long run, Ethereum does hope to lower transaction fees on their network. We can expect to see this in 2023.
How will the merge affect the ETH price?
Whether the merge will affect the price of Ethereum is unknown. Though many hope for the ETH price to skyrocket.
It is possible that the merge will lower eth token supply, causing a price increase. However, this is not guaranteed.
Ethereum merge FAQs and misconceptions
Will the merge make Ethereum faster to use?
Not much. The difference between transactions on the PoW system and PoS is ~1 second.
Will I need to upgrade my Ethereum account after the merge?
No, your Ethereum account and any Ethereum assets do not need to be upgraded.
Will I be able to unstake my ETH tokens after the merge?
No, you will not be able to unstake your ETH after the merge. You will have to wait until withdrawals are implemented in the next phase of the network upgrade.
Will I get an ETH2 airdrop after the merge?
No, there will be no airdrop of ETH2 tokens. Anybody claiming to be giving you an airdrop is a scammer.
Will the merge affect Ethereum Classic?
It is unclear what the effect of the merge will be on Ethereum Classic.