The merge is an upgrade from Ethereum’s Proof-of-Work consensus mechanism to Proof-of-Stake. Why are they doing this? To cut back energy consumption by roughly ~99.95%. This upgrade makes Ethereum a shining example of sustainability while laying the groundwork for future updates.
How did this all start? Ethereum first introduced Proof-of-Stake a very long time ago. Actually, it’s written in their whitepaper published in 2014. Adoption arrived eight years later on its Beacon chain. This chain is a ledger of accounts coordinating what’s known as “stakers.” Stakers are a group of people who use ETH as collateral for a chance to act as validators inside the Ethereum ecosystem. The Beacon served as an early consensus engine before mass adoption in the mainnet. The goal is to merge the two chains. The beacon chain serves as a consensus layer and the original mainnet serves as the execution layer.
With the Merge just around the corner, mining will be a thing of the past. Proof-of-Work requires users to have significant equipment purchased upfront for a chance at validating transactions to earn ETH. Finding the appropriate nonce for the current block hash (the 32-bit number) is a guessing game, and the more hashing power a user has (GPUs), the more guesses the user can make. This process is no longer necessary under Proof-of-Stake, drastically cutting energy consumption.
There won’t be noticeable changes in ETH in regards to usability. Transaction speeds will remain virtually the same, and costs will entirely depend on the market’s reaction to the merge since the update doesn’t concern fees either.
Proof-of-Work has served its purpose. Although there are legitimate concerns about centralization in the Proof-of-Stake (POS) consensus model, this is similar to the initial concerns about the potential vulnerabilities in Proof-of-Work’s (POW) case. Call it FUD, scaremongering, or whatever.
If we’re talking about “environmental impact,” Ethereum is a shining example of progressive thinking. Decentralization is a valid concern, however. The upside of POS, similar to POW, is the more validators in the network, the more decentralized the network is.
The Beacon Chain has been verifying orders on an independent chain for a while now. Active validators are verifying transactions as we speak. This chain is not related to the current Ethereum PoW chain, and the merge will ultimately combine the two. Nothing will be lost. The two chains will merge their transactional history, and the system will proceed as usual.
For anyone interested in reading more about the merge, especially stakers, infrastructure providers, and smart contract developers, you should read the documentation on:
https://ethereum.org/en/upgrades/merge/
Ethereum is moving towards an eco-friendly and sustainable model. We support them, welcoming all other companies to follow suit. The merge impacts future upgrades not possible under Proof-of-Work. Namely Ethereum’s plans with sharding.
Companies such as Polygon have made breakthroughs in Layer 2 technology. Many other solutions have forced Ethereum to shift its attention from Layer 2 to working on the merge. Along with more effective storage technologies, Ethereum wants the network capacity to grow significantly. All of these were not possible without Proof-of-Stake.
Quoted from Chrono Games CEO, Behfar: “Blockchain technology has brought the world together, but being responsible and owning up to your carbon debt is only the first step. The entire industry has to be proactive and go with what’s best long-term. Proof-of-Stake is a step in the right direction, and Chrono Games is committed to making decisions that support Earth and future generations.”