The Merge
ETH 2.0
A new era in blockchain technology began with Ethereum. Ethereum has smart contracts, in contrast to Bitcoin, which works as a distributed ledger for peer-to-peer transactions. The building blocks for decentralized applications are provided by smart contracts (dApps).
The blockchain has evolved from being just a decentralized, unchangeable, and transparent ledger to a worldwide network that enables a variety of use cases thanks to dApps. For instance, there are dApps for gaming, trading tokens, and lending and borrowing cryptocurrency, to name a few.
The second-largest cryptocurrency capitalisation, ETH, is primarily supported by the Ethereum network. Ethereum currently uses a Proof-of-Work (PoW) consensus model, similar to Bitcoin, to confirm transactions. In order to do this, Ethereum miners who verify transactions receive mining incentives.
The PoW consensus technique has, however, come under fire over the years for requiring a lot of energy. Environmentalists contend that PoW mining harms the planet, particularly when miners run their rigs on fossil fuels.
As a result, Ethereum started to switch to a Proof-of-Stake (PoS) architecture. Instead of relying on electricity, PoS uses a user’s stake. It is 99 percent more effective than PoW thanks to this characteristic. Ethereum aims to become more environmentally friendly and sustainable by switching to PoS.
Describing the Merge
The Merge is Ethereum’s most important update to yet. When Ethereum receives this upgrade, a PoS network will take over. The current Ethereum mainnet will combine with its new PoS consensus layer, called the Beacon Chain, after this upgrade.
In December 2020, the Beacon Chain was released independently of the Ethereum mainnet. Since then, it has operated as a distinct blockchain network in parallel to the mainnet. This indicates that no mainnet transactions have been recorded on the Beacon Chain. Instead, by deciding on the active validators and their account balances, a consensus is reached.
Importance
Ethereum will switch to a PoS mechanism when the Merge launches, combining the Ethereum mainnet and Beacon Chain. The update should be released in Q3 or Q4 of 2022. To ensure a smooth transition to PoS when the Merge ships, Ethereum has conducted extensive testing.
The Beacon Chain will take over as Ethereum’s consensus engine following the Merge. As a result, PoS validators will take over from miners as the source of valid blocks.
It is important to note that even when the Beacon Chain takes over as the consensus mechanism, Ethereum’s history will still exist. As a result, after the network switches to PoS, ETH holders won’t have to worry about money disappearing from their wallets.
Future outcomes
The goal of Ethereum’s developers is to keep building the network after the Merge until it is strong enough to benefit all of humanity. Vitalik Buterin, a co-founder of Ethereum, claims that the Merge would only complete Ethereum to a 55 percent level.
Future improvements to the network will likely take the form of a four-part fork that the engineers have dubbed “surge, verge, purge, and splurge.” After switching to a PoS paradigm, this improvement is expected to increase security and decentralization in Ethereum.
Buterin thinks a more scalable blockchain network will emerge at the conclusion of Ethereum’s vision. By the time it is finished developing, he predicts that Ethereum will be able to process 100,000 transactions per second. For the blockchain, which at this time processes around 15 transactions every second, this will be a significant turning point.
Final Thoughts
With the switch to PoS, Ethereum will experience major changes. Scalability is a benefit, but as Ethereum becomes less decentralized, the network’s security will suffer. But by making thoughtful design decisions, Ethereum can lessen the effects of straying from its original goal of being a decentralized and open blockchain network.
