The Merge - Ethereum's Transition To Proof-Of-Stake Consensus Mechanism

16 Aug 2022
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The Merge is Ethereum's biggest upgrade to date. The Merge is the union between Ethereum's new Beacon Chain proof-of-stake consensus layer and its current execution layer (the Mainnet we now use). To safeguard the network, it employs staked ETH rather than energy-intensive mining.

While the Beacon Chain operates concurrently with proof-of-stake, the Ethereum Mainnet continues to be protected by proof-of-work with all of its accounts, balances, smart contracts, and blockchain information. Proof-of-stake will replace proof-of-work when these two systems converge at the next Merge.



Mainnet and Beacon Chain Merging

Mainnet and Beacon Chain Merging

Proof-of-work has protected Mainnet since its inception. It holds each transaction, smart contract, and balance since Ethereum's launch in July 2015. This is the Ethereum blockchain that we are all familiar with.

Developers have been diligently preparing Ethereum for a potential switch from proof-of-work to proof-of-stake since the inception of Ethereum. Since its creation on December 1, 2020, The Beacon Chain has operated alongside Mainnet as a separate blockchain.

The Beacon Chain does not process Mainnet transactions. Instead, it has been establishing agreement on its state by agreeing on active verifiers and their account balances. The moment for Beacon Chain to agree on more is approaching after lengthy testing. Following The Merge, the Beacon Chain will operate as the consensus engine for all network data, including execution layer transactions and account balances.

The Beacon Chain will now be the official mechanism for producing blocks as of the Merge. As a result, valid blocks can no longer be created by mining. In its place, the proof-of-stake validators take on this responsibility and are in charge of processing all transactions' legitimacy and submitting blocks.

The complete transactional history of Ethereum will be unified once Mainnet and Beacon Chain are combined. Nothing needs to be done by you. Your funds are secure. 

 

When is the Merge happening?

According to a well-known blockchain community member, "the merge," Ethereum's long-awaited update, may occur on September 15 or 16 rather than the previously predicted date of October 1.

According to Anthony Sassano, an "Ethereum educator" and co-founder of EthHub, "The Ethereum mainnet merge has been tentatively scheduled for around September 15th/16th."

There are still two levels left in Ethereum's upgrading, dubbed "Paris" and "Bellatrix." Developers revealed that "Bellatrix" will occur on September 6 during the conference call.

When Ethereum's hash rate (a metric of a network's computational power) exceeds a specific threshold, the last phase of the upgrade, dubbed "Paris," will take place. Currently, September 15 is anticipated to bring about that.

 

What will be the impact of The Merge update?

But given that a network's hash rate is not constant and may rise or fall over time, this might alter in the upcoming days and weeks.

The need for miners will disappear as a result. Instead, validators will step in and lock up ETH, the network's native cryptocurrency, to maintain network security. As a result, the world's premier smart-contract blockchain is anticipated to become quicker, more scalable, and significantly more energy efficient thanks to this long-awaited and much-discussed improvement.

Because staking would probably slow the rate at which ETH's supply rises, the shift is also anticipated to have a deflationary effect on ETH. Additionally, it can be good for Ethereum investors if supply growth slows as demand increases.

The Merge is a part of a series of updates that redefine the blockchain's fundamentals and were once referred to as "ether 2.0." The blockchain's enormous power needs will be reduced by almost 99% if it is effective.

As with a proof-of-stake blockchain, staked cryptocurrency aids in protocol security. The blockchain following the Merge will be more secure the more ether is staked, as we'll see in a moment.

When proof of stake is implemented, miners won't need to solve cryptographic problems to validate brand-new blocks. They will instead add ether tokens to a pool.

 

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