How Will Ethereum Merger Change Web3?

The merger sounds like a twisted dystopian event, but it is actually the most significant change in the history of the Ethereum protocol. It marks one of the most significant changes in the technology’s short history, both for Ethereum and for cryptocurrency in general.

This is also significant for Web3 because it addresses some previous criticisms about why we can’t use technology like blockchain in our daily lives. It has the potential to show the public how powerful the progress of this technology is. Not only that, Ethereum, as well as other protocols, have become the typical “normal” use case for digital banking and DeFi .

The utility of Web3 is becoming increasingly apparent, and blockchain is only part of the true Web3.

What exactly is a merger?

Let's analyze it briefly.

For the past 8 years, Ethereum has been using the infamous Proof of Work model to create new coins and run their chains.

Proof of Work is a way for nodes in the network to reach consensus on which blocks and transactions to include in the network. Basically, it ensures that everything on the chain is legitimate through cryptographic proof.

However, there is a problem. Proof of Work relies on increasing difficulty to ensure its consensus. This means that Ethereum consumes more and more resources every year as crypto miners have to solve increasingly difficult problems to prove the state of the network.

Some argue that things like NFTs , and cryptocurrencies in general, are unsustainable for this very reason, given the energy consumption generated by proof-of-work.

Now, that has all changed with the “merger.” The merger essentially replaced Ethereum’s proof-of-work model with a proof-of-stake model. Overall, this changes the need for a lot of computing power required for mining, and introduces a more sustainable way to reach consensus.

It’s called a “merge” because the Ethereum mainnet has actually had a beacon chain running for quite some time, which has been gathering validators all along, but it also preserves the previous history of the Ethereum network, ensuring that only the consensus aspect is affected.

What’s interesting here is that consensus algorithms are essentially hot-swapped — in real time. It’s like manually pedaling a bicycle on the highway while simultaneously attaching an electric motor to it. Ethereum users don’t need to worry about what happens to their ETH or smart contracts, as upgrading to a new client is solely the responsibility of the node owner.

Layer separation in the Ethereum protocol

From a technical perspective, the merger also represents a separation of layers in the Ethereum protocol. Essentially, there will be multiple clients with different roles — but they can communicate with each other if necessary.

Before the merger, everything was bundled into a single client. After the merger, there are two clients. One layer handles syncing the network state (the consensus layer), while the other layer (later implemented) focuses on smart contract execution, block production, and storage.

The glue that holds these parts together is called the Engine API. The Engine API allows these layers to communicate seamlessly.

The separation of layers is actually quite important from a security perspective. For example, suppose one of Ethereum's applications has a critical vulnerability, such as allowing a block rollback. If the majority of the network uses this application, then Ethereum itself could be compromised. However, with the separation of layers, the consensus layer and execution layer will then be used by many applications at the same time.

This client diversity is important to Ethereum’s security because it reduces the network’s reliance on a single client or layer application.

What does this mean for the future of Web3?

Web3 is currently missing one thing — applications. This is largely because it is difficult for developers and companies to adapt to building dApps based on proof of work (PoW). Since Ethereum is the only mainstream chain that can build any kind of real-world applications on DLT, the merger is one step closer to achieving widespread adoption of Web3.

Not only that, the merger also reduces Ethereum’s energy consumption by an astonishing 99.95%. As energy consumption is often cited as a reason why blockchains cannot be adopted, the merger demonstrates the viability and development space of the technology, and subsequently the entire Web3.

Even blockchain will not be the entirety of Web3, instead it will be a convergence of technologies that allow for the true creation of Web3. Blockchain will simply be part of that stack - similar to how the backend is part of a full-stack application.

Big events like the “merge” are just the beginning of the standardization of Web3 technology.

in conclusion

From proof of work (PoW) to proof of stake (PoS) to better practicality, blockchain is moving in a positive direction. Improvements in blockchain will profoundly affect other aspects of Web3, allowing for greater adoption and standardization.

In a world where many people lack control, Web3 intends to return power and data to users. This is just the beginning of a new Internet.

Have a great day, and remember: build to learn, not build to learn.