Merge to the Future - The Daily Gwei #457
Where we're going, we don't need Proof of Work.
The Merge - it’s the most hyped up and exciting upgrade coming to Ethereum in its entire history and it’s now closer than ever. Not only will there be a massive 80-90% ETH issuance reduction at the time of The Merge, but the energy use of the Ethereum network will collapse by 99.98% (yes, that’s right).
I think that this energy reduction couldn’t be coming at a better time given all of the current controversy surrounding Proof of Work. Though it’s not only that - it’s also the fact that governments around the world are beginning to target things that use a lot of energy due to the Ukraine/Russia conflict (since Russia supplies a large chunk of Europe’s oil). I’m just glad that Ethereum won’t have to fight this fight - it will basically be left up to Bitcoin to defend itself from the attacks on Proof of Work (justified or not).
Another major but less talked about benefit of The Merge is that once it’s completed, we can get back to our regularly scheduled programming of doing normal Ethereum hard forks/network upgrades. The first one, codenamed Shanghai, is due to be implemented in Q4 2022/Q1 2023 and will bring with it a host of major upgrades to the protocol (including allowing stakers to withdraw their ETH for the first time ever). The included EIP’s that I’m most looking forward to revolve around lowering costs for layer 2 networks to potentially get them to less than 10 cents for a swap (before sharding).
Finally, I want to mention 2 really poor narratives that I’ve been seeing surface around The Merge. The first is that people seem to think that The Merge is going to reduce layer 1 gas fees - this is completely false and, at best, there may only be a tiny reduction in gas fees due to the decreased block times (from 13 seconds to 12 seconds). Second, many people seem to believe that all of the 10 million ETH that is currently being staked is “unlocking” at the time of The Merge - again, this is completely false. Staked ETH will not be unlocked until at least 6 months after The Merge happens as part of the Shanghai upgrade - and even then there is a limit of around 30,000 staked ETH per day that can be withdrawn from the Beacon Chain.
We are quite literally at the doorstep of The Merge and we really only need to wait a few more months to witness this awesome event. If all goes well with the Kiln testnet then the Goerli, Ropsten and other testnets will be merged and then finally we will get a mainnet window for the upgrade. My money is still on The Merge happening on mainnet in June/July and I honestly haven’t been this excited about something in a very long time!
The Merge is coming.
Have a great day everyone,
Anthony Sassano
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All information presented above is for educational purposes only and should not be taken as investment advice.