Ethereum Merge: 7 Things You Need to Know
Ethereum Merge has proved to be a historic event in the not-so-long history of cryptocurrencies and blockchains. While some people are eager to be the first witness of the merge as they keep an eye on the countdown, some people are still wrapping their heads around this significant event. Don’t worry if you fall in the latter category of viewers!
In addition, there are several misconceptions about the merger ranging from cheaper transactions to deflations of Ethereum, the rumors are just too many. So, before you give in to these rumors and begin expecting irrelevant things, let us walk you through this guide to the seven most important things that you should know about the Ethereum Merge.
What is Ethereum Merge?
Ethereum Merge marks the most crucial event in the advancements of the Ethereum blockchain and is a step ahead in accomplishing its vision of increased scalability, security, and sustainability. It will join the Proof-of-Work consensus of the Ethereum Mainnet with the Proof of Stake consensus of the Beacon Chain Network. This merge not only defeats the high-energy requirements of Ethereum’s executive layer but also improves the chain’s security by employing staked ETH.
Now that you have the basic understanding of how the merge will work, let’s glance back at how things used to work before the merge.
Beacon Chain and Ethereum Mainnet existed back then as well. However, their operations would run parallelly. While Beacon Chain used Proof of Stake to ship information, Mainnet used Proof of Work to secure its balances, smart contracts, and transactions. The merge joins these two chains and replaces PoW with a more sustainable PoS.
Effect of Ethereum Merge on the mining process
Since mining is the process that allows miners to earn coins with the help of the Proof of Work consensus mechanism and the consensus is being replaced by Proof of Stake, the mining process will be wiped out totally. The specialized mining software will become nothing but trash and the miners will need to stake Ether in order to earn rewards.
In case you have spent a hefty amount of money to buy the mining equipment, you may need to switch over to Ethereum Classic, still governed by PoW. Also, in case you are planning to develop a forked version of the blockchain, we aren’t quite sure whether it will be attractive enough for miners in the future.
How does Ethereum Merge make it more sustainable?
As we all must know Proof of Stake is more sustainable than the Proof of Work consensus algorithm and since Ethereum is well-known for its energy-intensive process which consumes a significant amount of energy. Before the Ethereum Merge, each Ethereum mining operation consumed 44.49 TWh of energy every year. This is equivalent to the energy consumed by smaller countries around the world.
It is estimated that the merger will reduce these energy requirements by approximately 99.95%. An estimated amount of 2.63 Megawatts will be energy consumed by the Proof of Stake consensus of the Ethereum blockchain post the merge. This value is not even equivalent to energy consumption even in a big city, let alone an entire country!
Will Ethereum Merge increase the price?
If we look at the price chart of Ether, it doesn’t seem like the Ethereum Merge will have anything to do with the prices of Ether. However, there are chances that the crypto may increase in price as more people will be interested in buying Ether in long term. (Now that it is more sustainable and eco-friendly.)
What happens to my Ethereum after the merge?
Nothing will happen to your Ethereum after the merge. Holders of ETH will still be able to see and access their funds in their wallets. However, it is believed that some exchanges may pause the deposition and withdrawal of ETH and other ERC-20 tokens on their platforms. For example, Binance had clearly stated that it will temporarily suspend the transactions around Ether and other tokens based on the Ethereum blockchain.
Myths and Facts about Ethereum Merge
While a wide range of emotions had been filling up the air around Ethereum Merge, a few misconceptions surfaced in front of us in the meantime. So, when you come across these myths, you can wickedly smile, knowing that it’s not a fact!
Myth #1: You will need 32 ETH for running a single node.
Fact: As bizarre as the myth sounds, the fact is that ETH was never needed for running a node on Ethereum, and nor it will be needed after the merge.
Myth #2: Users will be able to catch a breath from the sky-rocketing gas fee of Ethereum.
Fact: It breaks our hearts to say this, but it is not true. Since Ethereum is only changing its consensus mechanism and not expanding its network capacity, the gas fees will remain the same.
Myth #3: Ethereum Merge will enable faster transactions.
Fact: Though the merge is a significant move, it’s not directed towards improving the speed. There may be slight changes in the speed but it is mostly going to be the same, especially on the layer 1 levels.
Myth #4: You can unstake ETH once the merge will be executed.
Fact: Well, this feature is scheduled to be available in the future after the Shanghai Upgrade. However, as of now, you can now withdraw your stakes.
Myth #5: When Ethereum will begin allowing withdrawal, all the staking users will exit the ecosystem together.
Fact: To prevent this from happening, a validator exists and the rate is limited for the purposes of security.
Myth #6: The Merge will triple the staking APR.
Fact: How positive are these people! Though the APR is estimated to increase by 50%, it is never going to increase by 300%.
Myth #7: Ethereum merge will lead to downtime on the chain.
Fact: Transitioning to Proof of Stake will ensure that the transactions are not only sustainable but also without any downtime.
It’s okay to panic and worries about your funds on Ethereum getting lost, however, nothing like this is going to happen. As users, no action is required to access your assets after the merge. Since the history of Ethereum remains secure, you will be able to access your funds without making any upgrades. Ethereum Merge is a step ahead in improving the scalability of the chain which wasn’t possible with Proof of Stake as its consensus algorithm. Therefore, we must all look for a sustainable future post the merger.
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