Everything you need to know about Ethereum’s big The Merge update

The Ethereum Mainnet will soon switch from Proof of Work or PoW to Proof of Stake or PoS That will change in an upgrade called The Merge. The merger is part of a series of major upgrades to the Ethereum ecosystem, including The Surge, The Verge, The Purge, and The Splurge. The purpose of these upgrades is to make Ethereum more scalable and optimize energy consumption. The Merge combines the Ethereum mainnet with the Proof of Stake Beacon Chain and this milestone is expected to happen in September 2022.

BingMag.com Everything you need to know about Ethereum’s big The Merge update

The Ethereum Mainnet will soon switch from Proof of Work or PoW to Proof of Stake or PoS That will change in an upgrade called The Merge. The merger is part of a series of major upgrades to the Ethereum ecosystem, including The Surge, The Verge, The Purge, and The Splurge. The purpose of these upgrades is to make Ethereum more scalable and optimize energy consumption. The Merge combines the Ethereum mainnet with the Proof of Stake Beacon Chain and this milestone is expected to happen in September 2022.

Introduction

Since the launch of the Ethereum project in 2015, This popular cryptocurrency has established itself in the blockchain industry as a decentralized computing platform and has hosted thousands of projects on its blockchain. While Ethereum is one of the most active blockchains, its current infrastructure cannot scale its operations to meet growing global demand. In order to combat the lack of scalability, the Ethereum team has proposed a series of improvements that will lead to an evolved Ethereum blockchain. These improvements include Beacon Chain, The Merge, The Surge, The Verge, The Purge, and The Splurge.

Why is Ethereum evolving?

Blockchains typically rely on a The central reference is designed with the principle of decentralization. The advantages of decentralized blockchains include the lack of permission, reliability, and security.

As blockchains become more popular, platforms must ensure that they can meet global demand and be scalable. to match Failure to do this can lead to network congestion and when the capacity of the blockchain is filled by a very large number of transactions, this is when the transaction fees will become much higher.

However, if blockchains want to To remain decentralized, achieving security and scalability can become more difficult than ever. This problem is explained by the triple concept of scalability proposed by Vitalik Buterin. Blockchain's Trilemma describes the challenge of balancing the three important features of scalability, security, and decentralization.

As Vitalik Buterin has acknowledged, the pre-merger Ethereum network cannot meet the scalability criteria due to its consensus mechanism, Proof of Work to fulfill. Proof-of-work blockchains are more difficult to scale for a number of reasons. First, there is a limit to the number of transactions a block can confirm per block. In the second step, blocks must be mined at a fixed rate.

For example, Bitcoin is designed to be mined every 10 minutes on average, depending on the difficulty of mining which is automatically determined by The protocol is set, the blocks are mined. While Bitcoin's design is very secure, the block creation time combined with the transaction limit per block can lead to network congestion when demand is high. This often causes transaction fees and confirmation times to increase significantly. To overcome such PoW limitations, the Ethereum team has proposed a series of updates called Ethereum 2.0 (ETH 2.0). A groundbreaking move

BingMag.com Everything you need to know about Ethereum’s big The Merge update

The Ethereum 2.0 upgrade includes Beacon Chain (already implemented), The Merge (coming soon) as well as Surge, The Verge, The Purge and The Splurge. After the updates, the new Ethereum blockchain is expected to become more scalable, secure and stable while still being decentralized.

Beacon Chain

Beacon Chain Chain" is a blockchain that is at the core of Ethereum 2. In general, the bitcoin chain monitors the rules created under the proof-of-stake algorithm. This chain is also responsible for creating new blocks, but is not able to execute smart contracts.

Beaconchain can be considered the first phase or the so-called phase zero of the major changes of the Ethereum network, which introduced proof of stake to Ethereum and has control over its performance. Therefore, the implementation of the Beacon chain has caused Ethereum to become a combined proof-of-work and proof-of-stake network and has both of these mechanisms.

The Beacon chain, unlike the main network of Ethereum, which still runs on proof-of-work, is created by A proof-of-stake consensus algorithm is secured. In fact, Beacon has been working as a real test network for Ethereum 2.0 so far.

Beaconchain, which runs parallel to the mainnet, went live on December 1, 2020. This chain currently has more than 375,000 active validators and has been successfully implemented as the first stage of Ethereum integration.

Another important stage that awaits Ethereum after Beaconchain is another stage titled "Main net" is called the integration of these two stages, Ethereum integration. Proof-of-stake entry into the Ethereum network already by Beaconchain has taken place, but this network has not yet fully completed this path. Therefore, in order for Ethereum to completely change from Proof of Work to Proof of Stake, it must go through the Ethereum Merger.

Consensus Mechanism

When the merge happens, Ethereum Proof of Work It will be replaced by a proof-of-stake consensus mechanism. Instead of mining, blocks are created by nodes called validators. A node is randomly assigned periodically to confirm a candidate block. These lenders are incentivized to do so by transaction fees and staking bonuses. Since no node competes to add a new block, PoS takes up significantly fewer resources than PoW, making it more stable.

Tokens

Transaction History Ethereum will merge with Beacon Chain, but its Ether (ETH) cryptocurrency will remain the same. ETH funds will remain available after The Merge, and ETH token users do not need to take any action to prepare for the upgrade.

The current model has a token issuing system that can issue approximately 13,000 ETH per day in Distributes mining and rewards. Once the merger is implemented, there will be no more mining rewards, bringing new Ethereum issuance to approximately 1,600 ETH per day as staking rewards.

What's beyond The Merge?

While there are no official announcements about other Ethereum upgrades, The Surge, The Verge, The Purge, and The Splurge, Sharding is definitely in development and is slated to happen in 2023 after The Merge.

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BingMag.com Everything you need to know about Ethereum’s big The Merge update

Sharding

Ethereum 2.0 by introducing sharding mechanisms, related issues It improves transaction cost and processing time. With this upgrade, the said platform will perform thousands of transactions in a shorter time. Sharding is an important part of this upgrade. In simple language, sharding means separating and dividing a large chain into smaller chains (shards). After this upgrade, the workload between multiple validator distribution and sharding will lead to greater scalability, lower transaction fees and faster transaction processing speed.

The introduction of Ethereum 2.0 will turn Ether into a profit generating asset; Therefore, it can be expected that the number of active network nodes will grow exponentially. In addition, the introduction of the Proof-of-Stake consensus algorithm and the sharding mechanism and new approaches related to validation activities completely revolutionize the Ethereum 2.0 blockchain. These, along with the introduction of features like EIP-1559, make Ether a rare and non-inflationary asset in the future. Not to mention Ethereum's second-layer scaling solutions will enhance Ethereum 2.0 performance by improving:

  • Increasing Ethereum throughput (number of transactions per second)
  • Decreasing latency Confirmation (the time it takes for a transaction to be confirmed)
  • Reduce transaction fees (Gas)
  • Ensure high security by relying on Ethereum blockchain security

For example, in terms of transactions, the current Ethereum blockchain can handle 15 to 45 transactions per second. Meanwhile, scalable solutions of the second layer have increased this number to 1,000 to 4,000 transactions per second. Combined with the introduction of Ethereum 2.0, the Ethereum blockchain is expected to process around 100,000 transactions per second. Also, increasing the number of transactions per second means less congestion on the network, which will likely reduce transaction fees on the network.

Why are there so many scalability solutions?

It seems that Ethereum is preparing for the future and is going to take on a huge transaction load. The more solutions there are, the more likely it is to reduce overall network congestion. Additionally, this can avoid single points of failure if a scalability solution is insufficient. Having multiple scaling solutions not only prepares the network to increase transaction speed and throughput, but also helps users avoid high transaction fees.

Impact of the Merger on ETH

As one of the most prominent second-generation blockchain projects, Ethereum was launched with an initial supply of 72 million Ether (ETH). In the original PoW model, a large percentage of this token supply is used to incentivize miners to secure the network. Once transferred to PoS, mining rewards will no longer be given. As a result, there will be a net reduction in annual ETH issuance of approximately 90%. If the law of supply and demand comes into play, this could possibly lead to an increase in the price of ETH. However, financial markets are unpredictable and volatile, and there are many other factors at play.

Conclusion

Integration is the second in a series of significant upgrades to the network. It is Ethereum. Currently, the Ethereum network and community are preparing to implement new scaling solutions for better performance. After all the listed upgrades are completed, Ethereum is likely ready for more activity without risk

It is worth noting that the Merge update combines the Ethereum mainnet with the Proof of Stake Beacon Chain and is expected to happen this month.

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