To put it in a few words, the most talked about crypto incidents in the last few weeks have been around Ethereum, the Merge that is happening, how ETH2 will come to being, how that is going to change the Ethereum space as we know it, will ETH2 come out with a new token? Basically, Ethereum has been talk of the crypto town.
With the rising concerns and questions from the investors, the Ethereum officials has finally clarified on the most important pointers, which will be available following the Ethereum merge.
The Merge, which is set to transition the Ethereum blockchain from its Proof of Work consensus mechanism to the new Proof of Stake consensus mechanism, will also see a reduction in the ETH network’s energy consumption by an estimate of 99.5%. As per the clarification statement made by the Ethereum Foundation on Wednesday, August 17, 2022, there will not be any reduction in the gas fees, following the Merge.
The Ethereum Foundation said, “Gas fees are a product of network demand relative to the network’s capacity. 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 Merge, which is the transition step of the ETH blockchain in helping the network to join the current execution layer of the Ethereum mainnet with its new Proof of Stake consensus layer, is also termed as the Beacon Chain. This will also eliminate the need for previously energy intensive mining. The whole process is expected to be completed within the third or final quarter of 2022. According to a CoinTelegraph report, many investors and traders alike have sought to buy Ether in anticipation of the Merge upgrade, many of them appear to have done so under the misconceptions that the network’s capacity will surge once the upgrade is live.
The Ethereum Merge update on CoinTelegraph also reported that, ‘anyone is free to sync their own self-verified copy of Ethereum or to run a node, with no initial Ether staking requirements. With regard to staking, it is not possible to withdraw staked Ether until the following Shanghai upgrade goes live. Though, liquid ETH rewards in the form of fee tips will be available immediately. Validator withdrawals, once live, will be rate-limited to prevent a potential liquidity crisis. Transactions will also not be noticeably faster after the Merge. However, post-Merge APR yields on the network are expected to increase by 50% compared to now to attract capital. Client developers are currently working on a tentative deadline of Sept. 19 to complete the Merge, which is designed for zero downtime during the transition.’
Top 4 Misconceptions Regarding The Ethereum Merge
With the Merge almost at the last stage, there have been a lot of speculations regarding the result and the changes! Here are the top 4 misconceptions that people have regarding the Ethereum Merge:
- The Merge will reduce the Gas Fees: The ETH foundation has clarified that this is not true.
- Ethereum transactions will be faster after the Merge: Though the transaction rate will not be noticeably faster, this rumor has some truth in it. The Beacon Chain will be able to allow validators to publish a block every 12 seconds, which on the mainnet is roughly 13.3 seconds.
- The Merge will cause downtime for the ETH blockchain: The ETH developers anticipate no downtime, in contrast to the rumor, as the blocks transition from PoW to PoS.
- Availability of withdrawing staked ETH after the Merge: The staked ETH (stETH) that is a crypto asset which is backed by 1:1 Ether, is currently locked within the Beacon Chain. Stakers will be able to withdraw their stETH holdings following the next major upgrade after The Merge, known as the Shanghai upgrade. As a result, the assets will remain locked and illiquid for at least 6-12 months after the merger.
Read more: Ethereum Merge Explained