It’s happening. The Ethereum Merge is going down in less than two days, as of writing. For those living under a virtual rock, the hotly anticipated Ethereum Merge refers to the upcoming Merge of the Ethereum mainnet with the Beacon Chain.
Following this, Ethereum will move to a proof-of-stake (PoS) verification mechanism, which is touted as using at least 99 percent less energy than blockchains operating under a proof-of-work (PoW) consensus mechanism. We’ve already seen hard evidence of low-impact blockchains operating under a PoS model in the real world, thanks to Tezos, so the promise is irresistible.
The Web3 community has been ablaze with excitement surrounding what just might be one of the most revolutionary moments in the brief history of blockchain technology. But this left a few members of the community a bit too excited. To help manage expectations, we’ve compiled a short list of some of the biggest misconceptions currently floating around regarding the upcoming Merge.
1. The Merge won’t make gas fees a thing of the past
With Ethereum shifting towards the more efficient PoS model, some users have expected the de-facto NFT blockchain’s efficiency gains to lower — or even cancel out — the gas fees one must pay for each transaction on the network.
Unfortunately, that isn’t the case. Gas fees as we currently know them are here to stay following the Merge for the time being — at least, under the main Ethereum blockchain. That’s because the upcoming Merge is just the start of a host of planned upgrades for Ethereum. One of the more notable upgrades to expect in the wake of the Ethereum Merge is the introduction of sharding.
Sharding is “the process of splitting a database horizontally to spread the load,” according to the official Ethereum website. This enables the Ethereum blockchain to meaningfully address instances of network congestion without constructing more power-hungry crypto mining farms. It can work in tandem with layer 2 solutions to sustainably scale the existing Ethereum network and increase the possible number of transactions per second it can handle.
This is due to how sharding no longer requires a validator — a machine functioning as a node on Ethereum — to physically store the data of whatever transaction it’s currently verifying. In the long term, this enables less-powerful machines to function as validators on the network, further encouraging the expansion of the Ethereum network.
So how will sharding affect gas fees? It could reduce gas fees for transactions done on layer-2 networks, but chances are we’ll see more of the status quo for the main layer-1 Ethereum network.
2. The Merge won’t make transactions faster
Despite how PoS blockchains generally run faster than their PoW counterparts, the Merge isn’t going to do that for Ethereum. You might not even notice it once it’s up, since the Ethereum team has promised “zero downtime” for the upcoming transition. What improvements we’ll see in block time are described as marginal on the official Ethereum website, with the 10 percent uptick in block production time described as “unlikely to be noticed by users.”
Instead, the Merge is focusing on making transactions on Ethereum even more secure. Now, transactions will have a “finality” about them via the introduction of epochs. Following the Merge, blocks of data on Ethereum will get bundled into epochs that validators can vote on and authenticate within a certain amount of time. Once consensus is reached on the authenticity of a transaction, it’s marked for “finalization” in the next epoch.
3. You won’t be able to withdraw staked ETH until a later date
Anyone interested in helping scale up the Ethereum network following the Merge needs to be in it for the long haul. Why? According to Ethereum’s official website, staked ETH will be locked up until the planned Shanghai update sometime in 2023. But it doesn’t end there. After the merge, all staking rewards and newly issued ETH will also remain locked up on the Beacon chain.
With these funds remaining illiquid for six to 12 months following the Merge, Ethereum “hodlers” interested in staking ETH will need diamond hands until then. To become a validator on the Ethereum network post-merge, you’ll need to keep at least 32 ETH locked away. That’s roughly $50 grand as of writing. So what’s in it for Ethereum stakers until the update, then?
Fee tips. While some staking rewards will get locked away until the Shanghai update, stakers will still be immediately eligible for fee tips and miner extractable value (MEV) following the Merge. This is why gas fees won’t disappear anytime soon.
4. The Merge is not an instant remedy to blockchain’s environmental concerns
The keyword here is “immediately.” Even with Ethereum slashing its current energy consumption into oblivion, another blockchain player still uses more energy than small countries: Bitcoin. As it stands, Ethereum uses 20 to 39 percent of the blockchain industry’s global energy usage, according to a recent White House report. On the other hand, the highest estimate given for Bitcoin’s contribution to the blockchain industry’s energy usage is 77 percent. Even with Ethereum shrinking its energy consumption considerably, Bitcoin’s continued existence as a PoW network will continue to place considerable strain on the environment.
At the very least, the Ethereum Merge signals the beginning of the end of NFTs as a potentially bad influence on the environment. Let’s hope the Merge encourages other players in the blockchain space — especially Bitcoin — to follow suit. After all, it’s the only way we can reach for the next chapter of the internet, and elevate it toward its fullest potential.
Four Misconceptions About the Ethereum Merge Debunked is written by Jex Exmundo for nftnow.com