What is the Ethereum Merge? ETH 2.0 explained

The Ethereum Merge was the most anticipated upgrade in the history of Ethereum, merging the original Proof of Work (PoW) blockchain with the new Proof of Stake (PoS) Beacon Chain. This transition finally took place on September 15, 2022, marking a monumental achievement for the Ethereum network after years of preparation.

What is the Ethereum Merge?

The Ethereum Merge refers to the merging of the original Ethereum PoW mainnet with the PoS Beacon Chain testnet that had been running in parallel. This transition changed the consensus mechanism that secures the Ethereum blockchain from the energy-intensive PoW to the more efficient PoS system.

Instead of competitive mining, the PoS system relies on validators who stake ETH to secure the network. This merger paves the way for other planned upgrades like sharding to further increase capacity and reduce congestion.

Why Was the Merge Necessary?

The Merge aimed to solve some of the issues with the original Ethereum PoW blockchain related to scalability, security, and energy usage:

  • Scalability – The PoW chain was only able to process 15-30 transactions per second, leading to network congestion and high fees
  • Security – Attacks on the PoW network required controlling 51% of computing power, an increasing risk
  • Energy Usage – PoW mining used immense amounts of electricity to power the computations

By transitioning to a PoS system, the network can scale to process thousands of transactions per second in an energy efficient and secure manner.

Phases Leading up to the Merge

The Ethereum PoS upgrade was rolled out in phases over the course of two years:

The Beacon Chain

The Beacon Chain testnet introduced PoS to Ethereum as a separate blockchain running in parallel to the original PoW chain. It was launched on December 1, 2020 as the coordination backbone for the PoS network.

Testnet Merges

Several testnet PoW chains were merged with the Beacon Chain as full dress rehearsals for the mainnet merge. The Ropsten testnet merge happened in June 2022 followed by Goerli in August 2022. These gave developers a chance safely test the upgrade.

Mainnet Merge

The mainnet merge was completed smoothly on September 15, 2022, transitioning Ethereum from PoW to PoS ahead of schedule. This marked the official completion of the most significant upgrade in Ethereum’s history.

What Changed After the Merge?

While the Merge was a monumental milestone for Ethereum, the average user did not experience significant changes, at least initially:

  • ETH holders did not need to do anything to convert tokens
  • Users can still send/receive ETH as before
  • Validators now secure the network by staking instead of mining
  • Eventually, upgrades like sharding will increase capacity and lower fees

The improvements are more significant behind the scenes – transaction validation is now more efficient, secure, and sustainable.

What Comes After the Merge?

Additional upgrades are planned after the Merge to further enhance the usability of Ethereum:

Withdrawal of Staked ETH

Staked ETH and rewards were locked up from withdrawals throughout the Merge process until the Shanghai upgrade enabled withdrawals starting April 2023.

Danksharding

Danksharding (previously called sharding) planned to roll out in 2024 will split the blockchain into parallel chains to drastically improve transaction speeds and lower costs.

Other Upgrades

Other upgrades with names like the Surge, Verge, Purge, and Splurge will introduce innovations over 2023-2024 to boost scalability and sustainability.

The Merge was a monumental achievement in improving Ethereum as the most widely used programmable blockchain globally. But it is only the beginning, with more scaling solutions and upgrades coming that will leverage the power of PoS to expand functionality and accessibility. Ethereum is cementing its place at the forefront of Web3 development.

Frequently Asked Questions

Did ETH holders need to do anything before the Merge?

No action was required – holders automatically received POS ETH after the Merge.

What happened to staked Ethereum?

Staked ETH remained locked until withdrawals were enabled through the Shanghai upgrade in April 2023. Validators continue earning rewards.

Why should I stake Ethereum?

Staking lets you earn rewards on your ETH holding while helping secure the PoS network. More decentralized stake makes attacks more difficult.

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