What Is The Merge And Why It’s Important For Crypto Community

• The Merge refers to Ethereum’s adoption of the Proof-of-Stake consensus mechanism while abandoning the previous Proof-of-Work mechanism.
• The name is due to the merging of Ethereum’s Mainnet chain with its Beacon chain.
• It has resulted in reducing Ethereum’s energy usage by 99.95%.

During its genesis, i.e. launch in July 2015, Ethereum used Proof-of-Work (PoW) as its consensus mechanism. However, soon, the shortcomings of this mechanism like limited scalability and increased energy requirements were recognized, and Ethereum proposed the shift to a Proof-of-Stake (PoS) consensus mechanism.

Merge is the successful transition of Ethereum from the Proof-of-Work to Proof-of-Stake mechanism, and the reason why it’s called Merge lies in the fact that it involves merging two chains.

The Mainnet chain, with PoW, was initiated during Ethereum’s launch, and the Beacon chain, with PoS, shipped in December 2020 and was successfully merged on September 15, 2022.

Dates to consider

Mainnet chain/ Ethereum launched on	30 July, 2015
Beacon chain shipped on	1 Dec, 2020
The Merge on	15 Sept, 2022

The result of the Environment

One of the advantages of the merger is that it helps to reduce the energy consumption caused by mining. Both PoW and PoS have different effects on the environment, and this is discussed below.  

Proof-of-Work

Here the miners were competing against each other to solve the cryptographic puzzle, block creation, and validating a transaction, and ultimately were incentivized by the blockchain to do so. 

However, this uses up a lot of computational power and since it is not energy-efficient, it is detrimental to the environment. 

Proof of Stake

Here the validators first put some of their tokens at stake, and then among the ones with the highest stake, some are chosen and are given the right to block creation and validate a transaction. 

This has reduced Ethereum’s energy requirements by a whopping 99.95%, making it a Green Blockchain

The Result of Security

The Merge improves the economic security of the Ethereum blockchain. Any hacker needs to control 51% of the blockchain’s value to cause any disturbance in the network.

With the PoW mechanism, this meant a number of $5 Billion with which the hacker could buy ample transformers and computers and launch an attack.

After the merger with PoS, this number increased to $20 Billion, increasing the economic security of the blockchain. 

Even then, if someone manages to execute the 51% attack, the network can easily identify them and punish them by removing them and burning their stake. 

What The Merge means for its users and platforms

The users, although understanding the concept behind it, were confused if it required  them to make any changes or whether their ETH tokens would still be valid 

The answer is, that ETH is just ETH. There is nothing like a new ETH or an old ETH. The users do not need to upgrade or update anything from their end. Their tokens, wallets, digital assets, and accounts hold the same value now as they did before the merger. The entire transaction history on the Ethereum platform since Genesis is still present, unaltered, and intact. 

Looking at the widespread network of Ethereum in supporting numerous dAPPS, DeFi protocols, and NFT’s marketplace on its platform and its shift to a more eco-friendly network will start the ripple effect of more platforms adopting a similar scheme. It also laid the foundation for future networks of Web3 to be more climate-friendly. 

What the Merge does not change

• Transaction fees

The transaction fees of a network depend on the congestion and network traffic, and the Merge has nothing to do with it. It does not promise lower transaction fees. 

• Transaction Speed

Although a shift from Proof of Work to Proof of Stake will slightly change the transaction speed, namely in the finality time, this change will hardly be noticed by users. 

The Merge does not promise an increase in transaction speed.

Eth1 and Eth2

There no longer exists a term called Eth2, officially defined on the Ethereum website, although it may still be in use. There is just a single Ethereum and no two separate chains.