Everything You Need to Know About the Ethereum Merge

2022/08/10 10:00:00

The Merge is the most significant upgrade in the history of Ethereum. On August 10, KuCoin launches the ‘ETH Merge Gold Rush’ event for the upgrade of Ethereum. In this event, users can know more about the latest Merge-related updates and get the best crypto earning opportunities during the Merge.

This ‘ETH Merge Gold Rush’ event includes the following core segments:

· Learn more about the ETH Merge countdown and get the latest Merge news.

· Convenient Spot/Futures trading that supports assets associated with Merge such as ETH, ETC, Matic, Op, etc.

· Participate in ETH PoS mining for earnings. Staking promotions will be available soon, including ETH PoS mining and other staking products.

· Join KuCoin communities to participate in Merge-related discussions.

For more details about this event, please visit here. Now, let’s get started with what ETH Merge is.

What is the Merge?

Ethereum, the blockchain network that supports the second-largest cryptocurrency by market capitalization, is inching closer to implementing a significant upgrade. Dubbed the “Merge,” while this sounds grandiose and dramatic, in fact, it signifies an upgrade that will see Ethereum transition from a Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS) model.

Specifically, the Merge will mark the joining of Ethereum’s execution layer, which runs on a PoW model, and the Beacon Chain, which is Ethereum’s consensus layer, which is based on a PoS model. The mainnet currently holds all Ethereum accounts, balances, and smart contracts.

On the other hand, the Beacon chain shipped separately from the mainnet, and it currently runs parallel to the mainnet. After the two layers merge, Ethereum will become a PoS network. As such, validator nodes will take over the role of generating blocks, replacing miners who use energy-intensive rigs.

When is the Merge Happening?

The Merge is set to ship between Q3/Q4 2022. Ethereum developers are working with a soft deadline of September 19. However, this date could change depending on the success of the final testnet merge, which is dubbed ‘Goerli.’ Goerli is set for mid-August.

Why Does the Merge Matter?

The Merge will introduce significant changes to the Ethereum network. For instance, the Merge will reduce Ethereum’s energy consumption by 99.95%, making the network eco-friendly and sustainable. Furthermore, considering ESG concerns have limited Ethereum’s adoption, the Merge will play a massive role in boosting the network’s adoption.

Additionally, the Merge will make Ethereum more scalable. At the moment, the Ethereum network handles around 30 transactions per second. Once the network transitions to a PoS consensus model, it will set the stage for the four additional phases. At their completion, the Ethereum blockchain will be able to process 100,000 transactions per second, according to co-founder Vitalik Buterin.

After the Merge, validators will secure the Ethereum network by staking ETH. Validators will get rewards from the network’s transaction fees. To prevent malicious activities, Ethereum will cut a portion of a validator’s stake ETH if they accept invalid blocks.

Moreover, the Merge will prepare Ethereum for sharding, splitting the network into small bits to increase transaction speeds and cut costs. This development will help Ethereum cement its position as the largest network for non-fungible tokens (NFTs) and decentralized finance (DeFi).

What is the Impact of the Merge?

After the Merge, Ethereum might introduce triple halving. Specifically, the triple halving will reduce ETH’s supply by approximately 80% - 90%, which is almost equal to halving the Bitcoin system three times.

By transitioning to a PoS model, most ETH will go to staking, effectively minimizing the amount of ETH in the market.

What Might Happen in the Future?

By upgrading to a PoS consensus model, Ethereum will address its energy-consumption issues, proving that an energy-efficient and sustainable blockchain can operate on a massive scale. Additionally, the network will eventually introduce upgrades that might introduce fast transactions and lower gas fees. These changes will likely attract more institutions and Web 3.0 projects to build on the network.

While a PoS model might introduce some level of centralization in Ethereum, the same model will lower the entry barrier for validators. The PoS model will only require validators to stake ETH and earn rewards. Users with low amounts of ETH can pool their tokens in a staking pool and earn block rewards. To this end, Ethereum is set to attract more users, making it more decentralized.

Closing Thoughts

Ethereum’s transition to a PoS consensus model comes with numerous benefits. Post Merge, the network will allow ETH holders to stake their holdings and earn rewards by validating transactions. Additionally, the Merge will prepare Ethereum for future upgrades that might make the network more scalable, secure, and sustainable.