Time to Go All Guns Blazing for Faster ETH 2.0 After the Mega ‘Merge’
The Merge upgrade is joining the execution layer (mainnet) with the proof of stake consensus layer (Beacon Chain), which eliminates energy-intensive mining for sustainable crypto infrastructure growth.
Now the ETH holders can stake their holding to become validators instead of miners. Investors are optimistic about ETH’s growth because Ethereum 2.0 network will be more scalable, secure, and sustainable than the previous version.
Why is Merging Necessary?
Since its inception, Ethereum has run on Proof of Work consensus on the mainnet. In December 2020, the Beacon Chain was created to run the Proof of Stake consensus, which exists separately from the mainnet.
Before the Merge upgrade, Beacon Chain does not process mainnet transactions, but developers will attach the Beacon Chain with the mainnet after extensive testing. After the update, proof of stake consensus will run for all network data, including the execution layer and account balance.
It will officially use Beacon Chain as the engine of block production. The miners have no role to play in the coming days because proof of stake validators will play their role for all transactions and block generation.
That does not mean users will lose all the history, and the upgrade will be processed without interrupting the network usage. All the transaction history of Ethereum will be unaffected, and all funds will be safe.
When Will Ethereum Launch Merge Upgrade?
The Merge is expected to launch within Q3/Q4 of 2022. The developers are working on a soft deadline of the 19th of September, but it might change depending on the testing status on test nets. The client refinement and hash rates are important factors for its success.
The success rate will influence the ETH price prediction. Developers found some bugs in the system; they are working on the issues. However, the Merge is expected to launch soon.
Why is Crypto Fraternity So Excited about Merge?
Ethereum is the second largest cryptocurrency in the world which has taken center stage in crypto news because of the Merge upgrade. After years of speculations, experts, developers, and common users will finally get the chance to witness Ethereum 2.0.
This will benefit investors and traders in different ways, both in the short and long term.
- The Merge upgrade will reduce the selling pressure in this bear phase of the crypto world.
- The miners will be compensated for their efforts on the Ethereum network.
- Investors cannot withdraw their staked ETH before the Shanghai upgrade.
- The projected yield for ETH staking will increase after the upgrade, and it is good news for long-term holders.
- Ethereum will become deflationary.
- It will be a more scalable, faster, and secure network, so many new investors will come and increase the price of ETH.
- Ethereum will have more opportunities to diversify the use cases.
However, experts and analysts believe the recent Ethereum trend and the investors’ sentiment will not influence their Ethereum price prediction in the long run. As traders and investors, you do not have to switch or update anything because many scammers suggest you need to upgrade or transfer to ETH 2. Traders and holders should avoid such scams because all digital assets, including ETH, will remain the same after the update.
What Will Change After the Merge Upgrade?
To define the changes in the system, Ethereum Foundation uses an analogy with a spaceship in mid-flight where the community members have built a new engine and hardened hull to swap the old engine. It will make the system more efficient. The old engine uses Proof of Work to process transactions and add new blocks, but the new engine will run on Proof of Stake consensus that will make the engine less energy intensive and sustainable for future growth.
Miners will Lose Their Status
The Ethereum network will move from mining to staking for transactions and block creations, which means miners will no longer play any role in the network. Besides that, the rate at which new coins enter into the circulation will decrease by 90%.
Less Energy Intensive Network
Generally, miners use costly equipment to mine new blocks, which consumes more energy but Merge will eliminate the miners from the network, which saves up to 99% of energy in running the system.
Shading will be Possible
Shading splits the validation work to handle more transactions, making the network faster and allowing the users to run Ethereum on small devices.
Users Could Not Withdraw Staked ETH
After the Merge upgrade, users could not withdraw their staked ETH on the network. It will only be possible after the Shanghai upgrade, which is in the table for future updates.
What will Not Change After the Merge Upgrade?
Many investors and traders are curious to know what will remain the same after the Merge update on this network.
Many people have the misconception that the merge update will reduce gas and transaction fees, but it will not happen.
The past transaction history and funds on the account will remain the same. The Merge upgrade will be launched without interrupting the network. Users can access digital assets as they have previously accessed them.
Ethereum After the Merge
Vitalik Buterin claimed the network would handle 100,000 transactions per second, making it scalable and faster than the previous version. However, it is only the first stage. The five stages are as follows:-
The Merge: Transition to proof of stake consensus.
The Surge: Brings sharding to the protocol for faster transaction rates.
The Verge: Optimizes the data storage on nodes.
The Purge: Reduces the hard drive space, making the network suitable for validators.
The Splurge: Delivers miscellaneous updates to ensure smoothness.
Which Coins Could Potentially Benefit?
Ethereum will move to Proof of Stake consensus, and miners will have no role to play on the network, so analysts expect a surge in Ethereum Classic, which has been running on Proof of Work consensus. Miners invested a huge amount in buying the equipment for mining so that they would find an alternative to Ethereum.
The most suitable alternative is Ethereum Classic because we can find an uptrend on the price chart of ETC in the longer timeframe, which will continue after the Merge upgrade. However, investors are bullish if you consider their sentiment for Ethereum.
Many analysts suggest Ethereum Classic is a backup of the Ethereum Proof of Work version because if the merge update fails, users can save themselves on ETC.