The Ethereum Merge presents one of the most significant upgrades on the Ethereum network. Immense anticipation has been building up over the past few years, and now, it looks like the transition from PoW to PoS may finally be happening this year. The launch of Beacon Chain in December 2020 kicked off the Ethereum Merge process. However, the Merge has been postponed severally due to unprecedented delays.
For instance, there have been challenges with the Difficulty Bomb protocol that will be integrated into the Ethereum platform to increase the complexity of PoW calculations and consequently increase mining difficulty. Progressively, there is a glimpse of hope with the successful mergers of the Ropsten and Sepolia testnets and the Goerli testnet, which has successfully transitioned to the PoS, raising hopes for the Mainnet merge soon enough.
August 11, 2022, is the date scheduled for the last Merge testing on the Goerli network. Even so, a conference call between Ethereum developers on Thursday, July 14, 2022, hinted that the Merge might occur before the end of this year. Read on to find out more about the Ethereum Merge, its proposed date as well as the effect of the Merge developments on the ETH price rally.
What is the Ethereum Merge?
To solve issues that have continually hampered the platform, notably scalability, high gas fees, security, and slow transactions, Ethereum looks to switch from a Proof-of-Work consensus to a Proof-of-Stake consensus mechanism in an event termed "The Merge". According to Ethereum's co-founder Vitalik Buterin, Ethereum must scale to realize its vision of becoming a global decentralized programmable blockchain. The Ethereum Merge seeks to make the network more scalable and energy efficient by up to 99%.
The PoW vs. PoS debate has been going on for quite some time, with PoS proponents claiming that it's more environment friendly and secure, whereas PoW proponents led by Jack Dorsey claim that PoS is centralized and less secure. Vitalik has been at the forefront of aggressively defending PoS, claiming it's a solution to Ethereum's environmental woes and scalability problems.
The Merge will be marked by linking the current execution layer of Ethereum (the current Mainnet) with Beacon Chain-a new PoS layer that acts as a digital ledger of accounts and functions to coordinate the network of stakers. Since its creation, the Beacon chain has been running parallel to the Mainnet, meaning it hasn't been processing any transactions. However, it has reached a consensus by agreeing on active validators and their account balances.
Essentially, the Ethereum Merge will eliminate ETH mining which is pretty energy intensive and secures the network using staked ETH. The goal is to make the Ethereum network more secure, scalable, and sustainable.
The Ethereum Merge Timeline
The Merge started with the creation of the Beacon Chain on December 1, 2020, kicking off Phase 0 of the Merge process. Phase 1 of the process, i.e., Sharding, was scheduled to kick off in Q-3 2022 but got pushed to Q1 2023 due to the challenges involved in the code auditing process.
June 2022 marked the launch of the Sepolia testnet Beacon Chain, preparing the stage for the Merge dress rehearsals. On July 7, Sepolia was finally merged with Mainnet. Phase 2 of The Merge involves transitioning from the Ethereum Virtual Machine (EVM) to Ethereum WebAssembly (eWASM).
The last trial of the Merge is scheduled to occur on August 11 on the Goerli network to offer Ethereum network developers crucial technical insights before the final Merge is slated for Q4 2022. Extensive testing and bug bounties are currently being conducted to ensure a seamless transition to Proof-of-Stake consensus.
What to Expect After The Merge
The Ethereum Merge will see the unification of the current Ethereum Mainnet and the new Beacon Chain into a single blockchain network. Following The Merge, the Beacon Chain will be the consensus engine for all Ethereum network data, including user account balances and execution layer transactions.
With The Merge, Ethereum will switch from PoW to PoS consensus. Unlike PoW, the proof-of-stake consensus mechanism validates block transactions based on the number of coins staked by a validator. Therefore, ETH mining will no longer exist on the network since it will no longer be the means of producing valid blocks.
Instead, the Beacon Chain will be the engine of block production. PoS validators will assume the role of validating transactions and will be responsible for processing the validity of all transactions and proposing blocks.
While there's so much to expect after the Merge, there are certain things you shouldn't expect. With numerous misconceptions surrounding The Merge, there is a lot of misleading information concerning what to expect after The Merge. One thing you shouldn't expect after The Merge is the creation of a new Ethereum token, i.e., ETH2.0. Since no history data is lost when Mainnet combines with Beacon Chain, the Merge won't result in creating new tokens. The entire history of Ethereum transactions will also be merged during the process, meaning that every user's funds and transaction records will still be safe.
What else you should not expect after the Merge include:
- Reduced transaction (gas) fee
- Faster transaction speeds
- The possibility of withdrawing staked ETH
- Ethereum network downtime
When is the Ethereum Merge Date?
September 19, 2022, is the latest confirmed date for the highly anticipated Ethereum Merge. The news of the new potential Merge date was unveiled during the developer's conference call on July 14, 2022, between Ethereum POS Implementers.
In the video conference call, Ethereum core developer Tim Beiko proposed a tentative date of September 19 for The Merge. Meanwhile, following the meeting, an Ethereum developer identified as superphiz.eth on Twitter tweeted that September 19 proposed date is more of a roadmap than an actual deadline. He also provided a clear roadmap to The Merge with the Mainnet Merge planned for August 18 and Bellatrix for early September just before The Merge occurs two weeks later on September 19.
While The Merge isn't guaranteed to occur on September 19, having a date and clear timelines in place raises hope for a Mainnet merge this year, considering that Ethereum has been postponing it since 2020, citing technical hitches.
Is the Ethereum Merge Driving the Rally?
Certainly! The news of the potential Merge date stemmed from a clear timeline seems to have sparked an interest among eth investors. Since Beiko's statement on July 14, Ether has rallied 22%, hitting a one-month high of $1 475. ETH prices have increased by 15% in the past week, recording the highest price growth since March this year.
Currently, the cryptocurrency market is on the path to recovery as most coins continue accumulating gains. This new affirmed Merge date is certainly a catalyst for Ethereum price appreciation.
Past activities on the Ethereum network have seen similar bullish runs. For instance, three weeks before the implementation of the London hard fork on August 5, 2021, Ether rallied by over 60%, hitting $2 800 in under three weeks.
The Ethereum merge will see the combination of the current Ethereum Mainnet with the Beacon Chain as a single blockchain network based on the PoS consensus.
While the Merge won't immediately solve some of the most pressing challenges on Ethereum, notably high gas fees, it will set the stage for further network improvement for upgrades such as Shanghai and Shading.
Now that the Ethereum Merge has a tentative date and a clear timeline, the ETH price chart has displayed a bullish run, gaining 15% in the past week, thanks to increased investor interest.
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