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What other work must be done before the Ethereum Merge happens?

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Before you know it, the Ethereum PoS upgrade with frequent ticket bounces may really be about to happen. After this upgrade, what impact will it have on the entire Ethereum ecosystem?

Written by: 0x76@BlockBeats

Ethereum has clearly drawn a roadmap for future development since its launch. In the original vision, Ethereum will need to go through four main development stages: Frontier, Homestead, Metropolis, and Serenity.

Up to now, the upgrade goals of the first three stages have been basically completed before 2020. The main development work of Ethereum in the past two years has been concentrated on completing the upgrade task of the last stage. In the original vision, the main goal of the Serenity phase upgrade is to switch Ethereum from the current PoW workload proof mechanism to a more energy-efficient PoS mechanism.

The name is frequently modified, and the upgrade is delayed again and again

With the gradual development of the ecology on the chain after the launch of Ethereum, many new problems that were not expected before are constantly being discovered. Therefore, the upgrade plan proposed in the early years has also been continuously revised and improved.

In 2017, the concept of Ethereum 2.0 was proposed by the development team. The new Ethereum 2.0 upgrade plan basically includes the main content of the previous Serenity upgrade, and proposes a new solution to the sharding problem in response to the existing scalability problems. In that year, the entire 2.0 upgrade program was planned to be finalized in 2020.

In the Ethereum 2.0 upgrade plan, the entire upgrade will be divided into 3 independent stages, they are:

Phase 0: Complete the conversion from PoW to PoS;

Phase 1: Add fragmentation;

Phase 2: Upgrade the virtual machine and execution environment;

Of course we have seen that as of today, that is, in 2022, Phase 0 of the Ethereum 2.0 upgrade plan has not yet been fully implemented.

However, in the past few years when the upgrade plan has been skipped, the underlying technology of the blockchain has also been continuously developed and improved. Especially with the sudden emergence of Rollup expansion technology, the Ethereum Foundation has revised the upgrade goals in order to better combine Rollup technology to complete the expansion of Ethereum.

At the beginning of this year, the Ethereum Foundation revised the entire Ethereum 2.0 upgrade plan and name. In the latest roadmap, the concept of Ethereum 2.0 was abandoned to prevent users from pitting Ethereum 2.0 against the current Ethereum 1.0.

Because in fact, the currently running Ethereum mainnet will not be abandoned after the upgrade, but will be merged with the currently launched Ethereum Beacon Chain for one. Therefore, after the merger, the Ethereum main chain that has been running well will still exist and will be named the "execution layer" of the new version of Ethereum, while the Beacon Chain launched in 2020 will become the "consensus layer" of the new Ethereum. Mainly responsible for the security and consensus work of Ethereum.

In the new version of the roadmap, the entire upgrade process is still divided into three stages, namely:

1. Beacon Chain: Beacon Chain is now online, This chain will be the core of future Ethereum shards. The Ethereum pledged by the current user is stored on this beacon chain;

2. The Merge: The Merge phase is the upgrade we are about to face, Including the switch from PoW to PoS, and the current merger of the Ethereum main chain and the beacon chain, so this stage is also called The Merge;

3. Shard Chain: At this stage, Ethereum will Expanding from one chain to the final state of a total of 36 shard chains, it is expected that transaction performance will be greatly improved with the implementation of sharding;

Preparation for The Merge Upgrade

In order to prevent any uncontrollable risks in the official upgrade, the official team will launch multiple testnets for combined testing. So far, the Ethereum development team has launched two generations of testnets, namely the Kintsugi testnet and the currently running Kiln testnet.

During the testing phase, the running Kiln testnet has successfully merged multiple devnets. According to the plan, in the next step, Kiln will gradually merge the testnets of the Ethereum mainnet, which is the testnets such as Ropsten and Rinkeby that we often see in the MetaMask wallet.

If no major problems are found in the next stage of testing, it is expected that preparations for the mainnet merger will begin immediately.

About the specific stage of the test, users can visit wen merge? (https://wenmerge.com/) website to track the latest progress of the test. If there are no major failures in the next few merge tests, the final mainnet upgrade may be put on the agenda immediately.

When is The Merge expected to happen?

First of all, it needs to be explained that the official has still not given any clear upgrade time. But according to various indications, if all goes well, The Merge will happen around June this year.

For the specific speculation process, please refer to an article previously translated by Rhythm BlockBeats: "Why Ethereum will definitely complete the merger before June 2022?" "(https://www.theblockbeats.info/news/29750)

What impact will it have after The Merge is successfully upgraded?

1. The selling pressure of Ethereum has been greatly reduced

In the PoW stage before The Merge upgrade, Ethereum needs to issue about 12,000 ETH every day. Since miners consume a lot of energy to participate in PoW mining, most of these additional ETHs are sold directly by miners to pay for the electricity and operating costs of maintaining the mining machines.

After the conversion of Ethereum to PoS, the additional issuance of Ethereum will be reduced to 1,280 ETH per day, which is about 10% of the previous amount. In addition, since the electricity cost of running a validator node is greatly reduced, node operators will no longer need to sell a large amount of additional ETH to maintain operations, and may re-stake some of the additional ETH to improve returns. The amount of ETH sold by miners across the market is therefore expected to be significantly reduced.

Therefore, after the merger, the additional issuance and selling pressure of ETH are expected to be greatly reduced, and the effect is approximately equivalent to the three simultaneous halvings of Bitcoin.

2. The Token of Stake in the beacon chain cannot be unlocked temporarily

With the launch of Beacon Chain in 20 years, a large amount of ETH is pledged to Beacon Chain in order to earn pledge income. until now,

A total of more than 10 million ETH has been pledged to the beacon chain. So will this part of ETH be unlocked with the completion of the merger?

According to the information provided by Ethereum developers in the official blog, this part of ETH is not expected to regain liquidity in the first time the merger occurs.

Because The Merge upgrade is an extremely complicated upgrade process, in order to minimize possible accidents during the upgrade process, the development team excluded almost all related Merged functional improvements that were not directly related. In other words, functional upgrades such as unlocking PoS pledges will not be added to the mainnet in the next upgrade after the merger is completed and it has been running stably for a period of time.

Therefore, users who have pledged ETH in the Beacon Chain before are expected to wait for a while to release the pledge, so that this part of ETH can regain liquidity.

3. A large number of high-end graphics cards have withdrawn from the mining return market

Since Ethereum, the most important graphics card mining public chain, is transformed into a PoS mechanism, it is expected that a large number of graphics cards used for Ethereum mining will re-enter the market . The once hard-to-find situation is expected to be greatly eased. (without forking)

4. Can it solve the problem of too high gas in Ethereum?

Not necessarily.

The cost of Ethereum gas is directly determined by market supply and demand. The upgrade of The Merge will not fundamentally change the supply limit of Ethereum's computing capacity, and it is not expected to significantly affect users' demand for computing on the Ethereum chain.

In the short term, the level of Ethereum gas may still be determined by the overall heat of the market, whether there are popular projects, and other demand-side fluctuations. If you want to completely improve the problem of high gas costs, you need to wait for Ethereum to make significant improvements on the supply side, which is also the main goal of the next phase of the shard chain upgrade.

Although it is currently expected that the shard chain upgrade will be launched in 2023, considering the overall difficulty of Ethereum upgrade and the history of frequent ticket jumps in previous upgrade plans , so let us wait for the Ethereum Foundation to fully prepare for the topic of the next stage of sharding upgrade before discussing it in detail.