What Is Ethereum Merge and The Major Misconceptions?
Table of contents
- What is the Merge?
- Misconception about the Merge
- 1. The Merge will result in overall network downtime:
- 2. The Merge will cause the transaction fee to be reduced:
- 3. The Merge will make transactions faster:
- 4. Investors will be able to withdraw staked ETH after the merge:
- 5. Staking APR is expected to triple after the Merge:
- 6. Validators will not be able to withdraw ETH rewards til the Shanghai upgrade:
- What do I need to do as an Ethereum user?
- When will the Merge happen?
- What if the merge goes wrong?
After the EIP-1559 upgrade last year, the entire ethereum ecosystem has been longing to see the Ethereum upgrade called "The Merge".
A lot of people are already speculating that the upgrade will make the price of ethereum soar, while some say it will make the blockchain faster and reduce gas fees, though all these opinions are speculation. The merge is a vital upgrade in the history of the Ethereum blockchain.
What is the Merge?
The merge is the name given to the moving of the ethereum blockchain from the proof of work (POW) to proof of stake Beacon Chain. The merge is the coming together of the two blockchains ; Mainnet Ethereum and Beacon Chain.
When the Merge takes place, Ethereum will not depend on miners to validate transactions. Instead, the network's transactions will be validated by entities called validators.
Using a PoS consensus mechanism, Ethereum validators are selected by owning 32 ether, and they are required to run three different pieces of software, which include a validator, an execution client, and a consensus client. Proof-of-stake (PoS) is the consensus mechanism that Ethereum will use after The Merge.
Misconception about the Merge
1. The Merge will result in overall network downtime:
The developers in the Ethereum foundation team have assured people that there will not be a network downtime as the Ethereum blockchain transits from proof of work to proof of stake.
2. The Merge will cause the transaction fee to be reduced:
Against the sentiment of many crypto traders and investors, the merger will not reduce transaction fees. The merge doesn't go to expand the network, nor does it provide a more efficient transaction structure.
3. The Merge will make transactions faster:
The merge will bring several changes to Ethereum, but faster transactions are not part of the things to expect in the upgrade. Though ethereum developers said that there would be a 10% in block production as ethereum moves to proof of stake, the increase will not amount to anything.
4. Investors will be able to withdraw staked ETH after the merge:
Staked ETH (stETH), a cryptocurrency backed 1:1 by ETH, currently lies locked on theBeacon Chain. While users would love to be able to withdraw their stETH holdings, the developer community has confirmed that the upgrade does not facilitate this change.
Withdrawal of stETH holdings will be made available during 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.
5. Staking APR is expected to triple after the Merge:
That's not true. The merger is not going to cause the staking APR increase. The developers in the ethereum foundation have not made any statement about an increase in staking APR.
6. Validators will not be able to withdraw ETH rewards til the Shanghai upgrade:
While staked ETH remains blocked for investors until withdrawals are resumed following the Shanghai upgrade, validators will have instantaneous access to the fee rewards and maximal extractable value (MEV) earned during block proposals from the execution layer or Ethereum Mainnet. As the fee compensation will not be newly issued tokens, it will be available to the validator immediately.
What do I need to do as an Ethereum user?
The merge is a protocol upgrade; as an ethereum user, you don't need to do anything before or after the merge. Nothing will happen to the ether(s) that you hold in your wallet.
When will the Merge happen?
The great upgrade that many developers, investors, and traders have been expecting over the years is now. The Merge is going to happen between the 15th of September, 2022.
What if the merge goes wrong?
Many people have been asking that if the merger goes wrong, it will cause some havoc on the Ethereum chain, and the general market sentiment might be bearish. But it is unlikely for the merge to go wrong because the developers in charge can deliver ethereum to proof of stake successfully.
This is the highly anticipated upgrade in the history of the Ethereum blockchain. The Merge will be implemented on Ethereum's main network on or around September 15, 2022, or when the total difficulty reaches 58750000000000000000000. At that time, the network will merge with the PoS consensus mechanism that has been applied to the Beacon chain and the testnets Ropsten, Sepolia and Goerli.