The Ethereum Merge meaning and explanation 📖
The network upgrade of Ethereum from Proof-of-Work (PoW) to Proof-of-Stake (PoS) consensus mechanism is known as The Merge or the Ethereum Merge 2.0.
The Merge, which happened in September 2022, is considered one of the most significant events in the blockchain world in recent times. It had been a long time coming.
What are PoS and PoW?
Blockchains essentially work through ledgers. These ledgers are like huge registers or spreadsheets, if you will, that are used to do record-keeping of all the transactions.
There are also nodes in a blockchain. These nodes are great in number and it is important for all of them to have a consensus. Some use the PoW system and some use the PoS system.
PoW is where you have miners, individuals, who use energy, electricity, coding, and mathematics to do the needful. Whereas, in PoS, it is more of a staking game.
With PoW, there is an exorbitant amount of energy and computational power that is used. PoW also involves competition which sometimes increases the possibility of a big chunk of blocks being owned by a certain miner, jeopardizing the security of a blockchain.
Thus, the Ethereum blockchain decided to shift.
Why did the Merge take so long?
Vitalik Buterin and other Ethereum core members had planned the merge for a long time but it was delayed for more than 6 years. This was due to engineering complexities and billions of dollars at risk. Once it was achieved, it was considered a massive milestone in blockchain history.
The Merge was the joining of Ethereum’s already established execution layer with its new PoS consensus layer which is called The Beacon Chain.
To understand layers better, read the following:
It happened in a two-step process called (1) Bellatrix and (2) Paris.
Bellatrix was the process of network update in the consensus layer while Paris was the execution layer that helped transition from the (PoW) to the (PoS) consensus mechanism.
Some amazing benefits of the Ethereum Merge
- It will increase the efficiency of the Ethereum Blockchain and PoS will help decrease the energy consumption of the Ethereum network.
- In PoW, it was costly for individuals to stake their ETH as it used to include the purchase of hardware and power supply. The PoS mechanism will reduce this barrier and invite more individuals to take a stake in their ETH and secure the network.
- Sharding will be possible in PoS. It is a process that breaks down data into smaller shards to increase the speed of transactions in a blockchain. This will help in the scalability of the Ethereum Blockchain.
The Merge will reduce worldwide electricity consumption by 0.2%
Vitalik Buterin, on the benefits of the Ethereum Merge
How has the transition affected Ethereum blockchain?
The transition has not only reduced energy consumption but also provided security to the Ethereum Network.
Justin Drake, an Ethereum researcher stated the following while talking about security in the PoS consensus mechanism,
“The other interesting aspect of the Ethereum merge is that with PoS if we do suffer a 51% attack, we can precisely identify the attacker and eject them from the system. More than that, we can penalize them, including by destroying all their stake. And if they want to make a second attack, they have to rebuy”.
The Merge shall also prove to be great for increasing the overall scalability of the Ethereum blockchain along with risk-minimization.
These benefits shall consequently have a big impact on the overall demand for the blockchain.
So far, the Ethereum Merge has been lauded as a welcome change and has been embraced & celebrated by the blockchain community worldwide