15/09/2022
Ethereum Merge!
What will happen (the purpose 🎯) and What will not happen (the rumours 🥸) with this merge? Would you like to know?
Let's start with ‘What will happen “- the Purpose 🎯
1. Lower energy consumption⚡: One of the main downsides of the PoW consensus mechanism is the massive amount of power consumption, as every miner here is in a computational race.
Now, this energy consumption is estimated to reduce by 99.98% as ETH merge to PoS mechanism.
2. Increased Decentralization and Security: The barrier to entry to become a miner is lower with PoS since you do not need the insanely costly hardware that was required in PoW to setup a node; instead, you only need 32 ETH to own a node.
Moreover, with PoW, you need spend money to buy hardware 🖥️, whereas, in PoS you are staking, which you can withdraw at any time, implying that you are not losing money.
(Only if you’re submitting a false transaction, then your ETH might get slashed, which also brings security)
So this easier validator requirements increases network participation which eventually helps in increase security 🔐 and decentralization.
3. Reduction in the Inflation Rate of ETH 📉: The ETH PoW network currently pays validators around 13,500 ETH each day to help them pay for hardware, electricity and securing the network.
After the merge, it is expected to drop by 90%, significantly lowering ETH inflation rate.
Now coming on to 'What will not happen' - The Rumours 🥸
1. Gas prices won't be reduced🙅♂️: The merger from PoW to PoS won't affect the gas prices; they'll remain as they are. That means, when there is high activity in the network, the gas price will rise, and vice versa.
2. There won't be a faster transactional speed 🏃🏻♂️: Again, the switch to PoS will have no effect on how quickly transactions are processed. The speed will continue to be the same as it is now.
The goal of merging is not to be a low-cost, high-speed chain. The goal is to support high-value transactions along with being a security and settlement layer for other L2s, which already have low fees.
3. ETH does not become a governance token 🏦: There's a misconception in lot of minds that with PoS merging, the amount of ETH you have means you may vote on the direction of the network and what changes occur to it in the future. But this is just a myth as this won't happen.
The chain gets upgraded in the same manner it is being upgraded now, meaning by the consensus of validators and implementation of EIPs—Ethereum Improvement Proposals.
The final merge is expected to happen around September 15th to 20th. We hope for the best as this merge is actually a Big Deal for the whole crypto industry.
