What is the Ethereum Merge?
Introduction
The “Merge” was the final phase in Ethereum’s strategy to transition from a proof-of-work (POW) consensus system to a proof-of-stake (POS) consensus mechanism. But what exactly does this signify? How will it influence ethereum?
An Analogy
Imagine you’re in San Francisco when the city is just getting started and attracting millions of individuals from all over the world. While it is exhilarating at initially, as more people arrive, there are challenges that arise. There are more and more pollutants and the expense of living starts to go up. This is similar to the present status of the Ethereum network, which is based on a proof-of-work (POW) consensus process.
Current State : Proof of Work
Proof-of-work (POW) refers to a network security technique in which miners solve complicated cryptographic problems that use a lot of power. In our city analogy, the people coming in the city reflect the millions of ethereum transactions that occur every day, causing the network to become clogged. Because of the large volume, consumers have had to pay higher transaction fees. This is the first issue with the current Ethereum network’s scalability.
Future State : Proof of Stake
The second issue with such a bustling city is its long-term viability. Burning massive amounts of polluting energy is analogous to the energy-intensive activities of the proof-of-work consensus method, which is NOT environmentally sustainable. What if this run-down city could be converted into a bustling metropolis at the touch of a button? What does that mean? Everyone would go about their everyday lives without interruption and in a more sustainable environment. This is what would happen in principle once Ethereum switched to a proof of stake consensus method (POC).
The ETH “Merge” ushers in a new era for the Ethereum network, allowing it to become more sustainable, scalable, and secure. Furthermore, the status and transaction history of Ethereum will stay unchanged following the merger. This implies that present ethereum holders are not needed to take any action. For example, if you are already a liquidity provider on Uniswap, you will continue to be one, following Ethereum’s proof of stake update. The sole difference is that Uniswap will now be based on proof of stake consensus rather than proof of work.
POW to POS Transition
As you may expect, transitioning from proof of work (POW) to proof of stake (POS) is a massive undertaking. Furthermore, the Ethereum engineers are attempting to accomplish this with the flick of a finger. Any network failure during the “Merge” attempt would result in a catastrophic domino effect. Obviously, developers dislike downtime. Their performance must be faultless.
Initially, Ethereum’s shift to proof of stake was broken into two significant steps: 1) establishing the Beacon Chain and 2) the “Merge” itself.
The beacon chain is a distinct parallel proof of stake blockchain that was intended to execute testing without interfering with the Ethereum mainnet or the hundreds of billions of dollars stored on it. In our city analogy, the beacon chain can be thought of as a hologram of the shiny new metropolis being constructed to see how it will operate before people move in. This simulation would provide the engineers additional time to evaluate the new blockchain and identify any potential flaws in the system prior to the merging.
The “Merge” will then connect Ethereum’s mainnet and beacon chain in the second stage. Then, the present proof-of-work consensus layer is switched off and replaced by the proof-of-stake consensus.
