Ethereum merge: what is it?

Written by Evgenia Sidorova
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What is The Merge?

Merge is the title of the event when the Ethereum blockchain transitions from Proof-of-Work (PoW) to Proof-of-Stake (PoS).

Merge is known as like that due to the fact it is the merging of two unbiased blockchains that are presently walking in parallel. The fundamental Ethereum blockchain is “merging” with a specialized blockchain known as the “Beacon Chain”. Beacon Chain was launched on December 1, 2020. The motive of the Beacon Chain community is to do one single thing: to be a Proof-of-Stake blockchain.

There are no tokens, transactions, or DeFi protocols on Beacon Chain. It is an empty blockchain meant completely for use as a blockchain with a Proof-of-Stake consensus mechanism.

Since the Beacon Chain is an “empty network”, it can merge with the Ethereum blockchain and exchange the Ethereum PoW mechanism. Once these two networks are merged, the Ethereum PoW consensus will be changed with a PoS consensus mechanism.

What happens immediately after The Merge?

The method of switching to PoS is accompanied and will be accompanied through expanded volatility of the ETH coin.

Firstly, at the very second of the community transition to PoS, alternate charge drawdowns are viable – each due to likely community downtime (which we wrote about above), and due to restrictions on transactions at some stage in the transition. For example, Binance has warned that deposits and withdrawals of ETH and WETH will be paused on September 6 at 5:00 am Moscow time (Bellatrix consensus stage replace time) and September 15 at about three am (Paris degree update). The restrictions will continue to be in impact till the updates are completed.

Moreover, the Ethereum price may want to decrease if the Merge is accompanied by means of community troubles and bugs. On the other hand, towards the backdrop of information about the Merge and the transition to an synthetic deflationary mannequin (commission burning), the fee of ETH is developing noticeably. So, on September 5, the day earlier than the first update, the ETH/USDT charge rose from $1557 to $1687 (+8.3%).

Why is The Merge important?

Every year, Ethereum is gaining extra and greater reputation amongst users. To similarly increase the 2nd greatest cryptocurrency in the market, it is critical to meet the world want for speed, safety and environmental friendliness.

Blockchains do now not regularly alternate so fundamentally. In the records of crypto, no longer a single blockchain, particularly such a large, famous and ecosystem one, has gone through such good sized changes. There are many dangers related with feasible quite a number errors, and this is one of the important reasons why the transition to PoS took so long.

Merger will minimize the annual furnish of ETH from 4.3% to 0.43%. This is due to the effectivity upgrades that the PoS consensus mechanism provides. PoS offers an excessive degree of blockchain protection at a decreased cost, therefore permitting you to pay much less for community security. In total, the transition to PoS reduces emissions with the aid of greater than 90%.

How will The Merge impact me and my ETH?

Binance has formally noted that the Merge will now not have an effect on holders’ cash on the change itself. After the transition, all cash will nonetheless exhibit up as ETH in users’ wallets.

It is really worth noting that there is a subject for cash saved on quite a number wallets outside the native Ethereum network, for example, on Polygon, Optimism, Avalanche, etc. For the security and protection of your funds, it is better to return such wETH to the ERC-20 network.

You’ve got ETH Merge questions. We’ve got answers.

Is there anything I need to do to prepare for The Merge?

No, Merge has already activated, so there is no want to do anything. During the replace durations of any of the networks, as in the Bitcoin halving, the fantastic issue to do for your savings is to do nothing and wait for the outcomes of the process, which are occasionally sudden and irreversible. We advise no longer to strive to speculate each a week before, at some stage in and a month after the merger.

How will The Merge impact Ethereum’s price?

After the transition to PoS, mining rewards will no longer be issued. As a result, there will be a discount in the annual emission of ETH with the aid of about 90%. If the regulation of grant and demand works, this can additionally lead to an increase in the fee of the coin.

On pinnacle of all that, the arguments in favor of a long-term upward thrust in the fee of ETH are based totally on the truth that the hobby fee for staking Ethereum will upward jab to 6-7%, which will cause an extent in demand for the coin.

Will ETH automatically become ETH 2? Will Ethereum 2.0 be a new coin?

No, as ETH1 and ETH2 will be no different.

Will The Merge reduce gas fees?

No. This is a misconception that has arisen due to confusion between the concepts of “Ethereum 2.0” and “Merge”.

What other upgrades are coming after The Merge is complete?

After the Merge, there will be the Surge, the Verge, the Purge and the Splurge.

How will scalability be addressed in The Merge?

It is clear that the network began to work faster. Its throughput has increased, and therefore Ethereum has become more scalable.

Why is Ethereum moving to Proof-of-Stake?

If PoW makes use of the approach of aggressive verification, which in flip requires extra and extra electricity costs, due to the fact the complexity of fixing the hassle (hash rate) is continually growing, then PoS selects the community members that have “frozen” the biggest variety of coins, and this does now not require power prices at all.

To be precise, it requires: to preserve the operation of your machine and servers, however this is the same as the error in calculating the electricity fees for mining. Back in August, Bloomberg wrote that the annual consumption of the Ethereum community used to be at round 93.95 TWh. This is related to the consumption of electrical energy by way of a massive European state.

What is the difference between Proof-of-Work and Proof-of-Stake?

Proof of Stake (PoS) includes this kind of mining, the place rather of the computing energy of the participants, you simply want to shop crypto-assets in your account.

Proof of Work (PoW) works differently. Users use the strength of their pc and acquire cash as a reward. This is how PoW transactions are confirmed.


A hard fork is the system of introducing most important changes, mainly to the “split” of the authentic blockchain into two networks that do not now have interaction with each other. As a result of a trade in the operation of the unique network, a new cryptocurrency is formed. This is precisely what occurred with Ethereum – in addition to ETH, ETC used to be additionally formed.

However, now not the whole neighborhood supported the innovation. There had been those who believed that no one had the proper to make adjustments to the underlying code of the blockchain, even in the tournament of such attacks. These conservatives created a separate mission – Ethereum Classic.

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