Ethereum 2.0 and The Merge: All You Need to Know

Ethereum 2.0 and The Merge

Ethereum 2.0 and The Merge are among the hottest topics for the crypto community lately. Below, we look at everything you should know about it as it comes to fruition. 

In 2022, one of the most highly-anticipated events for the crypto community is the merge between Ethereum’s mainnet and the Beacon Chain’s proof-of-stake system. 

Dubbed “The Merge” by the community, it marks the end of Ethereum’s proof-of-work as the community knows it today, making way for Ethereum 2.0. This next version of ETH is set to be based on a proof-of-stake consensus algorithm. 

The guide below focuses on the details surrounding Ethereum 2.0 and The Merge, some technicalities, timelines, and common misconceptions. 

What Is The Merge? 

As we said, “The Merge” is slang coined by the community that refers to the transition of Ethereum from a proof-of-work to a proof-of-stake consensus algorithm. 

The Ethereum Foundation provides its own definition, stating that it “represents the joining of the existing execution layer of Ethereum (the mainnet we use today) with its new proof-of-stake consensus layer – the Beacon Chain.”

The goal is to take care of the energy-intensive process of mining while reinforcing the security of the network used to stake ETH. This shift is expected to provide a few key benefits to the network: 

  • Improved security
  • Better sustainability 
  • Smoother scalability 

For the sake of clarity, let’s take a look at the technical side of the shift. 

The Beacon Chain

This is the cornerstone of the architecture behind Ethereum 2.0. The Beacon Chain is a separate blockchain, running parallel to Ethereum’s network. While it hasn’t processed transactions on the mainnet, it has been able to reach consensus on its own. 

How? 

It agrees on account balances and active validators. 

Unlike the mainnet, The Beacon Chain has a proof-of-stake consensus algorithm to secure it. This algorithm was created on December 1, 2020. 

Put simply, the Beacon Chain has functioned as a sort of testnet for Ethereum 2.0, and the Merge is about to change all of that. 

The diagram above highlights the point where the two systems join together. That’s when we’ll see the proof-of-stake system replace the proof-of-work system permanently. 

Here are some of the critical considerations Ethereum is reinforcing. 

  • Funds will be safe 
  • None of the history will disappear 
  • No more mining of ETH

When Will the Merge Happen?

Ethereum 2.0 and The Merge have been in the works for years. The precise date has felt like it’s looming off in the distant future for the longest time. However, this came to an end on July 14, 2022. 

That’s when someone from the Ethereum Foundation shared a timesheet that showcased a “soft” schedule of when the Merge may happen. 

Barring any unforeseen circumstances, it appears the Merge will occur on September 19, 2022. Still, it’s important to understand that this is not an exact date. It’s always possible for delays in the face of complications. 

Do I Need to Prepare for the Merge?

In the history of the crypto sector, this is one of the biggest events. That’s why there’s a good chance some bad actors will work to exploit it. The best thing you can do is prepare for an influx of scammers trying to take money from innocent people. 

How can you prepare? 

The most important thing to know is that ETH users and holders don’t have to do anything. There’s no need to take action with your funds or wallets prior to the Merge. 

The history of ETH will remain unaltered and fully intact following this transition. Any funds held in a wallet will be accessible afterward, and there is no need to take action in order to upgrade. 

Still, the ecosystem around Ethereum consists of more than holders and users. 

Staking Node Providers and Operators

If you operate a staking node, there are a few important actions to take to first run a consensus layer client and an execution layer. 

Authenticate both layers using a shared JWT secret. This will allow for secure communication. Additionally, set a fee recipient address to receive any tips you’d get. 

None-Validating Node Operators and Providers of Infrastructure

Here, your important action is to install a consensus layer client aside from an execution layer. Again, authenticate both with a JWT secret for secure communication. 

DApp and Smart Contract Developers

With Ethereum 2.0 and the Merge come some serious structural changes. For developers, it’s a good idea to review How The Merge Impacts Ethereum’s Application Layer.

5 Common Misconceptions

As with any highly anticipated event, the rumors are running wild throughout the community. Here are 5 common ones to consider. 

Running a Node Requires Staking 32 ETH

The Ethereum network has two types of nodes. 

  • One that can propose blocks
  • One that cannot 

Those not required to commit ETH don’t propose blocks. However, they are still integral to the security of the network because they hold all block proposers accountable. 

Transaction Speed Will Improve Drastically

Transaction speeds should remain roughly the same following the Merge, albeit with some slight changes. 

Staked ETH Will Be Withdrawn After The Merge

Any validator exiting the network is rate limited for security reasons. The limits in place allow for about 43,200 ETH to exit each day. Right now, there are over 13 million ETH staked. 

Gas Fees to Decline After the Merge

The Merge changes the consensus algorithm without expanding network capacity. So, it won’t result in reduced gas fees. Still, there are scaling solutions in the works meant to do just that. 

Overall Network Downtime

The upgrade should execute in a way that results in no downtime at all. Throughout the process, the network should continue to function. 

Ethereum 2.0 and The Merge: Are You Ready?

With all this in mind, the Merge is a major moment for cryptocurrency. One of the largest protocols is set for a major transition. With a “soft” timeline in place, there are sure to be scammers and rumors running wild. 

Stay safe out there, holders. 

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