The next important event in the crypto world will undoubtedly be the transition of the Ethereum network from proof-of-work to proof-of-stake, and we will talk about this topic in more detail in this video.
It is very possible that this will be the most important industry event of 2022, and the impact of this event is expected to bring an effect in the market even greater than the collapse of the famous “Luna” coin.
The most important aspect that this change brings is certainly the reduction of energy consumption that the network needs. This consumption reduction is expected to be approximately 99.95%.
So, the second largest Blockchain network in the world becomes non-polluting. This aspect is very important with the conditions of global warming that we all face today, and at the same time, is among the main impediments that keep governments and large investment funds away from investing in this cryptographic space.
Of course, there are several networks that already work this way or even with a negative carbon footprint, like Elrond, but they are much less known. With the transition of the giant Ethereum to proof-of-stake, the attention will return to this space, and other projects can enjoy an increased adoption. We hope that this change will take place successfully, even if we will run into small problems.
This is only the first step in a series of planned improvements to the Ethereum network, and the next steps depend on its success. In this initial phase of the transition, it is not proposed to solve the problem of high commissions, but that of energy consumption.
If this process fails, it is very likely that the crypto market will face a serious correction, but if the transition is successful, an increase in the price of Ethereum is expected to be so significant that it will lift the whole market. Of course, the backlash in such events is not necessarily imminent.
In general, at an interval of 6 months to a year, the real effects begin to be seen.
In the future, Ethereum proposes a switch to sharding exactly as the Elrond network currently works, which for now, from a technological point of view, proves difficult to match.
One of the great difficulties that Ethereum is currently facing is the large number of transactions that the network supports every second. Any modification or update of the network must ensure the continuation and operation of ongoing transactions so that no one suffers losses. Here is the real challenge.
With a new Blockchain, it is much easier to do this update than with one of similar dimensions.
Another important aspect is that, after the transition to proof of stake, the network will capture the entire database that holds all the transaction history since 2015. The traceability of transactions being one of the important characteristics of a Blockchain.
If you own Ethereum at the moment and are wondering what you need to do to protect your coins at the moment of this “Merge,” it is important to know that you do not have to do anything before and after you will have access to all the funds you have in Ethereum.
Scammers will not hesitate to take advantage of this opportunity, and it is necessary to warn you.
DO NOT SEND Ethereum anywhere to receive Ethereum 2.0 or any other kind of Ethereum. All of these are scams, and the chances of you losing all the money are very high.
If you are a developer on the Ethereum network, you should know that smart contracts will be slightly affected, and you will have to make minimal changes.
If you want to run a stake node, we suggest you go to the official Ethereum website, where you can carefully study the steps you need to take. Initially, the deadline for Ethereum Merge was set on September 19, being recently announced that it will take place 4 days earlier, which shows the team’s confidence in the success of the transition. Rumour has it that 32 ETH is needed to run a stake node. Fake. This is false both before “Go” and after.
Anyone is free to sync their own self-verified copy of Ethereum (i.e. run a node).
There are two types of Ethereum nodes: nodes that can propose blocks and nodes that don’t.
Nodes that propose blocks are only a small number of the total nodes on Ethereum. This category includes mining nodes under proof-of-work (PoW) and validator nodes under proof-of-stake (PoS). This category requires committing economic resources (such as GPU hash power in proof-of-work or staked ETH in proof-of-stake) in exchange for the ability to occasionally propose the next block and earn protocol rewards.
The other nodes on the network (i.e. the majority) are not required to commit any economic resources beyond a consumer-grade computer with 1–2 TB of available storage and an internet connection.
These nodes do not propose blocks, but they still serve a critical role in securing the network by holding all block proposers accountable by listening for new blocks and verifying their validity on arrival according to the network consensus rules.
If the block is valid, the node continues propagating it through the network. If the block is invalid for whatever reason, the node software will disregard it as invalid and stop its propagation.
Running a non-block-producing node is possible for anyone under either consensus mechanism (proof-of-work or proof-of-stake); it is strongly encouraged for all users if they have the means. Running a node is immensely valuable for Ethereum and gives added benefits to any individual running one, such as improved security, privacy and censorship resistance.
The ability for anyone to run their own node is absolutely essential to maintaining the decentralization of the Ethereum network.
Another false rumour circulating is that Merge will reduce fees. False. The Merge is a change of consensus mechanism, not an expansion of network capacity, and will not result in lower gas fees. 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.
The next false rumour is this. You can withdraw staked ETH once The Merge occurs.” False. Staking withdrawals are not yet enabled with The Merge. The following Shanghai upgrade will enable staking withdrawals.
Staked ETH, staking rewards to date, and newly issued ETH immediately after The Merge will still be locked on the Beacon Chain without the ability to withdraw. Withdrawals are planned for the Shanghai upgrade, the next major upgrade following The Merge. This means that newly issued ETH, though accumulating on the Beacon Chain, will remain locked and illiquid for at least 6–12 months following The Merge. The only thing you will receive immediately after the Merge will be the commissions from the transaction, directly proportional to the Ethereum you stake.
According to the Ethereum team, Appreciation of stake is expected to increase by 50% following this Merge. What happened to ‘Eth2’? The term ‘Eth2’ has been deprecated as we approach The Merge. After merging ‘Eth1’ and ‘Eth2’ into a single chain, there will no longer be two distinct Ethereum networks; there will only be Ethereum.
To limit confusion, the community has updated these terms:
‘Eth1’ is now the ‘execution layer,’ which handles transactions and execution. ‘Eth2’ is now the ‘consensus layer,’ which handles proof-of-stake consensus. These terminology updates only change naming conventions; this does not alter Ethereum’s goals or roadmap. Originally, the plan was to work on sharding before The Merge to address scalability. However, with the boom of layer 2 scaling solutions, the priority has shifted to swapping proof-of-work to proof-of-stake via The Merge.
Plans for sharding are rapidly evolving, but given the rise and success of layer 2 technologies to scale transaction execution, sharding plans have shifted to finding the most optimal way to distribute the burden of storing compressed calldata from rollup contracts, allowing for exponential growth in network capacity. This would not be possible.
The information presented in this material was extracted from the official page of Ethereum, which I suggest you access from here and document yourself better.
I hope that now you understand better what this Merge means and what is its purpose and usefulness. Thank you for reading this far, and I encourage you to send this article to your friends to read it as well.
Until next time, take care of your money and be wise, make it work for you and your family!
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