2/ The Ethereum network is currently undergoing a massive and exciting new revamp called the Merge (originally called Ethereum 2.0), which is officially scheduled to take place on September 19.
But why are these upgrades necessary in the first place?
But why are these upgrades necessary in the first place?
3/ Launched in 2015, the Ethereum network quickly became a victim of its own success and began to suffer from a variety of scalability issues as well as from high gas (or transaction) fees.
4/ But the new upgrades should ultimately result in a more scalable, more secure, and more sustainable Ethereum network.
5/ The Merge will mark the end of proof-of-work (PoW) for Ethereum, and the full transition to proof-of-stake (PoS) while reducing Ethereum's energy consumption by ~99.95% and setting the stage for future scaling upgrades, including sharding.
6/ There are three distinct phases to the Merge.
7/ The first stage of the new network rollout started with the introduction of the Beacon Chain back in December 2020, which has since existed as a completely separate blockchain running parallel to the Ethereum mainnet. 
8/ The Beacon Chain has not been processing mainnet transactions but rather reaching consensus on its own state by agreeing on active validators and their account balances.
9/ With the Merge between the two chains rapidly approaching, the Beacon Chain is set to become the consensus engine for all network data, including execution layer transactions and account balances.
10/ Following the Merge, proof-of-work mining will no longer be the means of producing valid blocks. Instead, the proof-of-stake validators will take on this role and will be responsible for processing the validity of all transactions and proposing blocks.
11/ And no history will be lost with the switch. For example, once the mainnet merges with the Beacon Chain, the entire transactional history of Ethereum will also merge between the two chains, meaning users' funds will continue to be safe and secure.
12/ All of the excitement surrounding the Merge has led to a lot of misconceptions about what these upgrades will mean for the future of the blockchain.
13/ One of the biggest misconceptions surrounds how much ETH needs to be staked in order to become a validator and run a node.
14/ While earlier reports covering the Merge suggested that a minimum of 32 ETH was required to run a node, anyone is free to run a non-block producing node with no staked ETH required (although you still need an internet connection and about 1-2 TB of available storage).
15/ These nodes do not propose blocks, but they still serve a critical role in securing the network by holding all block proposers accountable by listening for new blocks and verifying their validity on arrival according to the network consensus rules.
16/ However, users will need to stake ETH in order to run a validator node, which has the ability to occasionally propose the next block and earn protocol rewards.
17/ Second, whilst some have cheered the Merge in anticipation of lower gas fees, the truth is that the switch from PoW to PoS will have no significant impact on lowering transaction fees.
18/ That is because gas is determined not by a blockchain’s consensus mechanism but rather by overall network capacity.
19/ While this might be disappointing to some, the growing number of layer- 2 scaling solutions in the Ethereum ecosystem as well as future upgrades that the network has in store should eventually bring gas fees down.
20/ Third, transaction speeds will largely remain the same once the Merge has been completed.
21/ In Ethereum’s current PoW form, the goal is generally to have a new block every 13.3 seconds. On the new Beacon Chain, blocks occur roughly every 12 seconds.
22/ Once the mainnet merges with the Beacon Chain, blocks will be generated 10% more frequently than they currently are. However, this change is not radically significant and likely will not be noticed by a majority of users.
23/ When it comes to staking and withdrawing assets on the post-Merge Ethereum, users will have to be patient and wait for the upcoming Shanghai upgrade, the next major upgrade following the Merge, before staking withdrawals are enabled.
24/ Staked ETH, staking rewards, and ETH issued after the Merge will still be locked up on the Beacon Chain without the ability for withdrawals, with all staked assets remaining locked and illiquid for approximately 6-12 months following the Merge.
25/ And a final misconception regarding the Merge is that all of the upgrades will require downtime of the chain (i.e. the chain going offline).
26/ The transition from PoW to PoS will not require any downtime.
27/ That’s because the Merge rests on the foundation of a concept known as Terminal Total Difficulty (TTD), which represents a cumulative measure of the total mining power that has gone into building the chain.
28/ Once all preconditions are met, blocks will instantly switch consensus mechanisms, in this case from PoW to PoS.
29/ This transition has been in the work for some time now with numerous testnets in recent months, including Ropsten, Sepolia, and Goerli, which just successfully wrapped up earlier this month.
30/ And as the Merge prepares to reach the finish line, the price of ETH has begun to rebound from recent slumps, hitting a two-month high while outpacing the rebound in the price of Bitcoin over the same period.
31/ The transition from proof-of-work to proof-of-stake will also have profound effects on Ethereum’s native currency - Ether. For example, the Merge will reduce yearly ETH issuance from 4.3% to 0.43%, which could eventually lead to the digital asset becoming deflationary.
32/ Another important component of Ethereum’s planned upgrades surrounds the future potential introduction of shard chains.
33/ “Sharding,” a common concept in computer science, provides secure distribution of data storage requirements, enabling rollups to be even cheaper, and making nodes easier to operate.
34/ Not only is this important for scalability reasons, the introduction of “sharding” will continue to make the network as decentralized as it can be.
35/ The new network of decentralized validators will only need to store data for the individual chain, or “shard,” that they are validating, rather than the entire network.
36/ Speaking at last month’s #EthCC, @VitalikButerin confirmed that the Merge is rapidly approaching whilst revealing that additional upgrades to the network are also on the way.
@VitalikButerin 37/ The “surge” refers to the introduction of sharding, while the “verge” will implement what Vitalik refers to as Verkle trees (a type of mathematical proof) and “stateless clients.”
@VitalikButerin 38/ These technical upgrades will allow users to become network validators without having to store extensive amounts of data on their machines while promising to bring 100,000 transactions-per-second (TPS) capability to the blockchain.
@VitalikButerin 39/ After all, in a proof-of-stake network, validators with locked-up or staked ETH confirm and verify transactions, making a post-verge Ethereum more decentralized than its current iteration.
@VitalikButerin 40/ The purge will see a mass wipe of old network history, and, as for the splurge, Vitalik merely indicated it was “on to the fun stuff.”
@VitalikButerin 41/ The end of proof-of-work will usher in the beginning of a more sustainable, environmentally friendly Ethereum, reducing the computing power and energy consumption needed to run the network while reaching the full scale, security, and sustainability envisioned by Ethereum.
@VitalikButerin 42/ Hope this was a useful thread. If you enjoyed this content, make sure to subscribe to my newsletter, where I break down all of the latest major developments in the crypto ecosystem:
linkedin.com/newsletters/th…
#Ethereum #Merge #ethereummerge #blockchain #crypto #ETH $ETH
linkedin.com/newsletters/th…
#Ethereum #Merge #ethereummerge #blockchain #crypto #ETH $ETH
• • •
Missing some Tweet in this thread? You can try to
force a refresh
