An Intro to “The Merge”
Content:
General Information-
What is the Merge? (ETH 2.0)
What is the date of the Merge?
What happens after the Merge?
What are the Pros/Cons of the Merge?
Closing Thoughts
General Information-
What is the Merge? (ETH 2.0)
The merge is a change to Ethereum’s protocol from Proof-of-work consensus to Proof-of-stake consensus. Ethereum has had great network growth since its inception but has run into some hurdles that the merge may fix. One of the biggest reasons why Ethereum is changing its consensus mechanism is to become 99% more energy efficient, unlike Bitcoin. Today, we are watching governments, politicians, and regulators criticize Bitcoin’s energy consumption because it hurts the climate. Whether you agree with the energy narrative or not, the plan to change the consensus will be a monumental change to the Ethereum network.
Figure A
2. What is the date of the Merge?
The Merge has been delayed a few times since being rolled out, but we have never seen a transition like this. The method of changing the consensus is highly sensitive which is why it's important that the merge is successful. There are thousands of tokens built on Ethereum, so it's vital that every detail is well thought out. Vitalik has stated that he is surprised at how long ETH2(The Merge) is taking in mid-2021. However, Vitalik recently stated that the Merge is set to launch on Sept 10-20 his Twitter profile.
Figure B
3. What happens after the Merge?
If the Ethereum protocol is changed to the new infrastructure, it allows users to “stake” their coins. Ethereum token holders may deposit their coins into a pool to stake on the network which allows them to receive new coins. Staking is a way that the network validates new blocks, more on that here. The merge will also cut costs and save energy by eliminating computers from mining. This change also has drawbacks that we will cover in the next section.
4. What are the Pros/Cons of the Merge?
Like everything in life, there will always be Pros and Cons for each decision. Let’s start with the cons of the Merge: (1) The Merge will make Ethereum’s blockchain more centralized as amazon may become a central point of failure after the Merge takes place. (2) By switching to Proof-of-stake exchanges will be holding tokens which gives them governance power over the network which may be bad. When Coinbase announced ETH2 staking it required users to lock-in their Ethereum for a set time. Now to cover some pros of the Merge: (1) The Merge will make Ethereum 99% more energy efficient and will reduce carbon footprint. (2) The Merge will make transaction times 10% faster, which will increase efficiency of the blockchain.
Figure C
Closing Thoughts
There are a lot of opinions on whether or not the Merge is necessary. The Merge is also taking a long time which doesn’t help because the miners are not agreeing to the change of the network. Additionally, the core founders of Ethereum are no longer there and have helped build the network from the ground up. People often forget that geniuses like Charles Hoskinson, and Gavin Wood were a part of the foundation of Ethereum. So not having such talent will indefinitely delay processes. The bottom line is that the Merge is long-awaited and will be a big moment in crypto history. Whether or not the Merge is successful it will be interesting to watch how/if Ethereum can pull it off.