Ethereum Celebrates Its Seventh Anniversary And the Coming Merge

2022/07/30 08:28:00

Ethereum ushered in a new era in blockchain technology. Unlike Bitcoin, which serves as a distributed ledger for peer-to-peer transactions, Ethereum features smart contracts. Smart contracts provide the building blocks for decentralized applications (dApps).

Through dApps, the blockchain went from being just a decentralized, immutable, and transparent ledger to becoming a global network that supports a wide range of use cases. For instance, there are dApps for lending and borrowing cryptocurrencies, gaming, and exchanging tokens, to mention a few.

The Ethereum network primarily supports ETH, the second-largest cryptocurrency capitalization. Like Bitcoin, Ethereum currently relies on a Proof-of-Work (PoW) consensus model to verify transactions. To this end, Ethereum miners that validate transactions get mining rewards.

However, the PoW consensus mechanism has, over the years, come under fire for being energy intensive. Environmentalists argue that PoW mining takes a toll on the climate, especially when miners use fossil fuels to power their rigs.

As a result, Ethereum began transitioning to a Proof-of-Stake (PoS) model. PoS relies on a user’s stake instead of power. This feature makes it 99% more effective than PoW. By transitioning to PoS, Ethereum seeks to become more sustainable and eco-friendly.

What Milestones Has Ethereum Achieved Since Its 6th Anniversary?

Following Ethereum’s sixth anniversary on July 30, 2021, Ethereum has implemented four upgrades on its journey to becoming a PoS blockchain. These are London, Altair, Arrow Glacier, and Gray Glacier.

London came first on August 5, 2021 on block number 12,965,000. This upgrade introduced EIP-1559, which changed the transaction pricing mechanism to include a fixed per-block fee, which the network burns. This pricing mechanism also expands or contracts block sizes to deal with congestion, thus increasing mining speed.

Altair was the first scheduled upgrade for Ethereum’s Beacon Chain, and it shipped on October 29, 2021. This fork added support for sync communities. It enabled light clients, which helped reduce the overhead needed to determine the head of the chain, thus increasing the network’s decentralization.

Arrow Glacier shipped on December 9, 2021. This upgrade postponed Ethereum’s difficulty bomb for several months, offering developers more time to develop ETH 2.0. The difficulty bomb forces the Ethereum PoW network to stop issuing blocks, making mining disadvantageous for miners and discouraging network users from using the PoW mining when the network switches to PoS.

Gray Glacier shipped on June 30, 2022, and it delayed the difficulty bomb by three months.

In between the upgrades, ETH recorded a significant milestone in its price history. On November 16, ETH set a new all-time high (ATH) of $4,891.

Additionally, the number of unique Ethereum addresses soared from 164.73 million to 201.37 million as of July 21. This denotes an average growth rate of 144.1 million.

What is the Merge?

The Merge is the most significant update in Ethereum’s history. This upgrade represents when Ethereum will transition to a PoS network. Following this upgrade, the current Ethereum mainnet will merge with its new PoS consensus layer, dubbed the Beacon Chain.

The Beacon Chain shipped separately from the Ethereum mainnet in December 2020. Since then, it has been running parallel to the mainnet as a different blockchain network. This means the Beacon Chain has not been recording mainnet transactions. Instead, it reaches a consensus by agreeing on active validators and their account balances.

Why is the Merge Important？

When the Merge ships, the Ethereum mainnet and Beacon Chain will become one, marking Ethereum’s transition to a PoS model. The update is expected to ship in Q3 or Q4 2022. Ethereum has carried out extensive testing to ensure the network seamlessly transitions to PoS when the Merge ships.

After the Merge, the Beacon Chain will become Ethereum’s consensus engine. This means the role of generating valid blocks will shift from miners to PoS validators.

It is worth noting that Ethereum’s history will remain intact even after the Beacon Chain becomes the consensus engine. As such, ETH holders don’t need to worry about funds disappearing from their wallets after the network shifts to PoS.

What Might Happen in the Future?

After the Merge, Ethereum’s developers plan to continue developing the network until it is powerful enough to help all of humanity. According to Ethereum co-founder Vitalik Buterin, the Merge would only make Ethereum 55% complete.

The network’s future upgrades include, but are not limited to, a four-part fork that developers have dubbed “surge, verge, purge, and splurge.” This upgrade is set to introduce more security and decentralization to Ethereum after it shifts to a PoS model.

Buterin believes the end of Ethereum’s roadmap will result in a more scalable blockchain network. He projects that Ethereum should be able to complete 100,000 transactions per second by the end of its development journey. This will be a massive milestone for the blockchain, which currently processes about 15 transactions per second.

Closing Thoughts

By transitioning to PoS, Ethereum will undergo significant changes. While scalability comes as a perk, Ethereum will become less decentralized, meaning the network’s security will also take a hit. However, by embracing careful design choices, Ethereum can minimize the impact of drifting from what it initially set out to become; a decentralized and open blockchain network.