Insight

The Ethereum Merge is complete, What next?

⛏ Proof-of-work🌱 Proof-of-stake🚀 Beacon Chain🐼 The Merge🌳 Sharding

BitpowrSep 28, 2022
Wallet Infrastructure

September 15, 2022 - The Day of The Merge What happened?

“Happy merge all. This is a big moment for the Ethereum ecosystem. Everyone who helped make the merge happen should feel very proud today”-This was Vitalik Buterin’s first post-merge message.

His satisfaction and excitement over the completion of this merger is well-deserved, as this update was comparable to changing a car’s engine while it was going at high speed; what were the chances of success?

The actual time and date of The Merge were changing because it was determined by difficulty and hash rate. It finally happened just before 3 a.m. EST on Thursday, September 15, 2022.

The Jubilation and excitement were off the roof as various organizations hosted watch parties.

Those who watched the Ethereum Foundation’s broadcast were eligible for a POAP — Proof of Attendance Protocol — a one-of-a-kind NFT that proved they were present.

What does The Merge mean though?

The Merge is the union between Ethereum’s initial execution layer the Mainnet, which has existed since its inception with its new proof-of-stake consensus layer, the Beacon Chain. It did away with the requirement for energy-intensive mining and instead allowed the network to be secured using staked ETH. This is a huge success in realizing the Ethereum vision of scalability, security, and sustainability. Sharding is the next phase of the Ethereum upgrade.

The Merge in summary: ⛏ Proof-of-work🌱 Proof-of-stake🚀 Beacon Chain🐼 The Merge🌳 Sharding

Some updates from Ethereum on the Merge

Merging with Mainnet

Ethereum Mainnet was secured by proof-of-work from its inception until The Merge. Programmers anticipated the inevitable migration from proof-of-work to proof-of-stake during the development of Ethereum. On December 1, 2020, The Beacon Chain was created as a second blockchain that runs alongside Mainnet but it did not initially handle Mainnet transactions. Instead, it was deciding on active validators and their account balances in order to obtain agreement on its own state

The Merge represented the official switch to using the Beacon Chain as the engine of block production. Mining is no longer the means of producing valid blocks. Instead, the proof-of-stake validators have adopted this role and are now responsible for processing the validity of all transactions and proposing blocks.

No history was lost in The Merge. As Mainnet merged with the Beacon Chain, it also merged the entire transactional history of Ethereum.

This transition to proof-of-stake changed the way ether is issued. Learn more about ether issuance before and after The Merge.

How did the Merge affect the Following?

  1. Users and holders. Despite the transition from proof-of-work to proof-of-stake, Ethereum’s whole history remains the same since its inception. The Merge does not require you to do anything with your assets or wallet. ETH will always be ETH. Anyone claiming otherwise is most likely a fraudster. Any funds in your wallet prior to The Merge still remain intact after The Merge. More on Ethereum security

  2. Node operators and dapp developers Following The Merge, there are a few things you should be aware of if you are a staker operating your own node setup or a node infrastructure provider.

Key action items include:

  1. Run both a consensus client and an execution client; third-party endpoints to obtain execution data no longer work since The Merge.

  2. Authenticate both execution and consensus clients with a shared JWT secret so they can securely communicate.

  3. Set a fee recipient address to receive your earned transaction fee tips/MEV. Read more details here

  4. Non-validating node operators and infrastructure providers. If you’re operating a non-validating Ethereum node, the most significant change that came with The Merge was the requirement to run clients for BOTH the execution layer AND the consensus layer. Readmore

  5. What of Dapp and smart contract developers? The Merge was designed to have minimal impact on smart contract and dapp developers.

The Merge came with changes to consensus, which also includes changes related to:

  • block structure
  • slot/block timing
  • opcode changes
  • sources of on-chain randomness
  • concept of safe head and finalized blocks

For more information, check out this blog post by Tim Beiko on How The Merge Impacts Ethereum’s Application Layer.

The Merge and energy consumption.

The Merge marked the end of proof-of-work for Ethereum and start the era of a more sustainable, eco-friendly Ethereum. Ethereum’s energy consumption dropped by an estimated 99.95%, making Ethereum a green blockchain. Learn more about Ethereum energy consumption.

The Merge and scaling

The Merge also set the stage for further scalability upgrades not possible under proof-of-work, bringing Ethereum one step closer to achieving the full scale, security, and sustainability outlined in its Ethereum vision.

Are there two Ethereum now, ’Eth1’ and Eth2’?

There is no longer any reason to distinguish between two Ethereum networks after merging ‘Eth1’ and ‘Eth2’ into a single chain; there is just Ethereum…

To limit confusion, the community has updated these terms:

  • ‘Eth1’ is now the ‘execution layer’, which handles transactions and execution.
  • ‘Eth2’ is now the ‘consensus layer’, which handles proof-of-stake consensus.

These terminology updates only change naming conventions; this does not alter Ethereum’s goals or roadmap.Learn more about the ‘Eth2’ renaming

After the Merge, What Next?

  • After the Merge, Sharding is next; it is set to be shipped in 2023. It will give Ethereum more capacity to store and access data, but it won’t be used for executing code. More on sharding here.

  • While Ethereum supporters and developers would argue that the move to PoS makes Ethereum significantly more decentralized and resistant to hostile assault, the actual data shows that staking centralization is growing, which can cause some significant issues. At this point, four providers already control stakes in 57.85% of the ether supply, with Lido commanding a commanding market share.

Bitpowr continues to support assets on the Ethereum Network. We help you scale your blockchain-based solutions quickly and cost-effectively. Contact sales or send us an email at [email protected] to get started.

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