What does ETH Merge mean?

Ethereum is one of the biggest network released on the blockchain back in 2015. It is a decentralized system, which means that it does rely on a central authority, that allows you to develop apps and organizations, keep or hold assets, transact, and communicate. With the new updates that Ethereum is integrating, it is working on keeping up with its initial vision revolving around a “more scalable, more secure, and more sustainable” network! 

The Merge!

The Merge is one of many major improvements in Ethereum's history. It symbolizes the union of Ethereum's existing execution layer, the Mainnet, with the Beacon Chain, its new proof-of-stake consensus layer previously launch in December 2020. It removes the necessity for energy-intensive mining in favor of securing the network utilizing staked ETH. To guarantee a secure transition to proof-of-stake, thorough research and bug assessments were conducted. This procedure is nearing completion, with intentions to perform The Merge on a few public testnets before moving forward with Mainnet. 

It's vital to recall that the Beacon Chain was first distributed independently of Mainnet. The Ethereum Mainnet, with all of its accounts, balances, smart contracts, and blockchain data, is still protected by proof-of-work, whereas the Beacon Chain uses proof-of-stake. The impending Merge is when these two systems ultimately merge and proof-of-stake permanently takes the place of proof-of-work. You can definitely refresh your minds when it comes to the proof of stake and proof of work models by visiting BLACK LEMON’s Academy section on the website! 

The upgrades are all inter-connected!

The Merge formalizes the Beacon Chain as the new consensus layer to the existing Mainnet execution layer. Once The Merge occurs, validators will be appointed to protect the Ethereum Mainnet, and proof-of-work mining will no longer be a viable method of block generation. Instead, blocks will be offered by validating nodes that have staked ether for the ability to participate in consensus. These enhancements pave the way for future scalability enhancements, such as sharding.

To address scalability, it was originally planned to focus on sharding before The Merge. However, with the rise of layer 2 scaling solutions, the emphasis has switched to The Merge, which converts proof-of-work to proof-of-stake. Plans for sharding are developing rapidly, but given the rise and success of layer 2 technologies for scaling transaction execution, sharding plans have shifted to determining the best “way to distribute the burden of storing compressed calldata from rollup contracts, allowing for exponential growth in network capacity”, as stated by Ethereum website. This would be impossible without first implementing proof-of-stake.

Who does this influence?

You do not need to do anything with your funds or wallet before The Merge if you are a user or holder of ETH or if you are a non-node-operating staker on Ethereum. Despite the switch from proof-of-work to proof-of-stake, Ethereum's entire history from its inception remains intact and unchanged. Any money in your wallet prior to The Merge will remain available after The Merge. You do not need to take any action to upgrade. You should also be on the lookout for frauds that aim to take advantage of people during this changeover period.

Nonetheless, there are a few things you should be aware of if you are a staker operating your own node setup or a node infrastructure provider in order to be ready for The Merge. The most major change for non-validating Ethereum nodes with The Merge is the necessity to host clients for BOTH the execution layer AND the consensus layer. In addition, the Merge has been planned to have minor effect on smart contract and dapp developers, however there are a few small points that developers should be aware of before The Merge.

There are some misconceptions about The Merge!

The Merge will mark the end of Ethereum's proof-of-work era and the beginning of a more sustainable, eco-friendly Ethereum. This will also pave the way for other scalability enhancements not achievable with proof-of-work, pushing Ethereum one step closer to the full scale, security, and sustainability stated in its Ethereum vision.

However, there are some misconceptions about this process. For example, anyone is allowed to run a node or sync their own self-verified copy of Ethereum. There is no need for ETH, not even 32 of them. Never before, never after, and never again. Also, The Merge is a change in consensus method, not network capacity increase, and hence, will not result in cheaper gas prices. Moreover, despite some minor adjustments, transaction speed on layer 1 will mostly stay same and will not become faster. 

It’s also important to note that with The Merge, staking withdrawals are not yet possible. Staking withdrawals will only be possible after the Shanghai update, and for security concerns, validator departures are rate controlled. Finally, The Merge update is intended to provide a smooth transition to proof-of-stake. As a consequence, resulting in chain downtime is a misconception!

There’s this analogy!

Ethereum website shares this analogy that we’d in turn like to share with you! It says, and we quote, “Ethereum is a spaceship that isn't quite ready for an interstellar voyage. With the Beacon Chain, the community has built a new engine and a hardened hull. After significant testing, it's almost time to hot-swap the new engine for the old mid-flight. This will merge the new, more efficient engine into the existing ship, ready to put in some serious lightyears and take on the universe.” 

Now, we’re definitely ready to take on the universe alongside Ethereum network which is one of many reasons why BLACK LEMON’s migration to the Ethereum network took place. Did you know that we have migrated and that lunatic things are on its way? Just stay tuned for more updates, we can’t tell you everything here!