What else needs to be done before the Ethereum 2.0 Merge occurs?

Since its launch, Ethereum has clearly drawn up a roadmap for future development. In the original plan, Ethereum will need to go through four major development stages: Frontier, Homestead, Metropolis, and Serenity.

So far, the upgrade goals of the first three phases have been basically completed before 2020. Ethereum’s main development work in the past two years has been focused on completing the upgrade tasks of the last phase. In the original conception, the main goal of the Serenity phase upgrade was to switch Ethereum from the current PoW proof-of-work mechanism to a more energy-efficient PoS mechanism.

Frequent name changes and repeated delays in upgrades

As the on-chain ecosystem of Ethereum gradually develops after its launch, many new problems that were not anticipated before are constantly being discovered. Therefore, the upgrade plans proposed in the early years have also been continuously revised and improved.

In 2017, the concept of Ethereum 2.0 was proposed by the development team. The new Ethereum 2.0 upgrade plan basically includes the main content of the previous Serenity upgrade, and proposes a new solution to the scalability problem that has emerged. In that year, the entire 2.0 upgrade plan was planned to be completed in 2020.

In the Ethereum 2.0 upgrade plan, the entire upgrade will be divided into 3 independent phases, which are:

Phase 0: Complete the transition from PoW to PoS;

Phase 1: Add shards;

Phase 2: Upgrading the virtual machine and execution environment;

Of course, we have seen that as of today, that is, 2022, Phase 0 of the Ethereum 2.0 upgrade plan has not yet been fully implemented.

However, in the past few years when the upgrade plan was repeatedly postponed, the underlying blockchain technology has also been continuously developing and improving. Especially with the sudden rise of Rollup expansion technology, the Ethereum Foundation has revised the upgrade goals in order to better combine Rollup technology to complete the expansion of Ethereum.

Finally, at the beginning of this year, the Ethereum Foundation revised the entire Ethereum 2.0 upgrade plan and name. In the latest roadmap, the previous Ethereum 2.0 concept was abandoned to prevent users from completely opposing Ethereum 2.0 with the currently running Ethereum 1.0.

Because in fact, the currently running Ethereum mainnet will not be abandoned after the upgrade, but will be merged with the Ethereum Beacon Chain that is already online. Therefore, after the merger, the Ethereum mainchain that has been running well will still exist and be named the "execution layer" of the new version of Ethereum, while the Beacon Chain launched in 2020 will become the "consensus layer" of the new Ethereum, mainly responsible for the security and consensus of Ethereum.

In the new version of the roadmap, the entire upgrade process is still divided into three stages, namely:

1. Beacon Chain : The Beacon Chain is now online and will become the core of future Ethereum shards. The Ethereum staked by current users is stored on this Beacon Chain;

2. The Merge : The Merge phase is the upgrade we are about to face, including switching PoW to PoS, and the current merging of the Ethereum main chain and the beacon chain, so this phase is also called The Merge;

3. Shard Chain : In this phase, Ethereum will expand from one chain to a final state of 36 shard chains. It is expected that transaction performance will be greatly improved with the implementation of sharding.

Preparations before The Merge upgrade

In order to prevent any uncontrollable risks in the official upgrade, the official team will launch multiple test networks for combined testing. So far, the Ethereum development team has launched two generations of test networks, namely the Kintsugi test network and the Kiln test network currently in operation.

During the testing phase, the running Kiln testnet has successfully merged multiple devnets. According to the plan, Kiln will gradually merge the testnets of the Ethereum mainnet, which are the Ropsten, Rinkeby and other testnets that we often see in the MetaMask wallet.

If no major issues are found in the next phase of testing, preparations for the mainnet merger are expected to begin immediately.

Regarding the specific stage of the test, users can track the latest progress of the test by visiting the wen merge? (https://wenmerge.com/) website. If there are no major failures in the next few merge tests, the final mainnet upgrade may be put on the agenda immediately.

When is The Merge expected to happen?

First of all, it should be noted that the official has not yet given any clear upgrade time. But according to various signs, if everything goes well, the merger will take place around June this year.

For the specific speculation process, please refer to an article previously translated by BlockBeats: "Why Ethereum will definitely complete the merger before June 2022?" (https://www.theblockbeats.info/news/29750)

What impact will The Merge have after the upgrade is successful?

Ethereum selling pressure has greatly decreased

In the PoW phase before The Merge upgrade, Ethereum needs to issue about 12,000 ETH per day. Since miners need to consume a lot of energy to participate in PoW mining, most of these additional ETH are sold directly by miners to pay for the electricity and operating costs of maintaining mining machines.

After Ethereum switches to PoS, the issuance of Ethereum will be reduced to 1,280 ETH per day, about 10% of the previous amount. In addition, since the electricity cost of running a verification node is greatly reduced, node operators will no longer need to sell a large amount of newly issued ETH to maintain operations, and may re-stake some of the newly issued ETH to increase returns. Therefore, it is expected that the amount of ETH sold by miners in the entire market will be greatly reduced.

Therefore, after the merger, the issuance and selling pressure of ETH are expected to be greatly reduced, and the effect is roughly equivalent to Bitcoin's three halvings occurring at the same time.

The tokens staked in the beacon chain cannot be unlocked temporarily

With the launch of Beacon Chain in 2020, a large amount of ETH has been staked on Beacon Chain to earn staking income.

A total of more than 10 million ETH has been staked in the beacon chain. Will this part of ETH be unlocked when the merger is completed?

According to the information provided by Ethereum developers in the official blog, this part of ETH is not expected to regain liquidity in the first place when the merger occurs.

Since The Merge upgrade is an extremely complex upgrade process, in order to minimize possible accidents during the upgrade process, the development team excluded almost all functional improvements that are not directly related to the merger. In other words, functional upgrades such as unlocking PoS pledges will not be added to the main network until the next upgrade after the merger is completed and has been running stably for a period of time.

Therefore, users who have previously staked ETH in Beacon Chain are expected to have to wait for some time before the stake can be released so that the liquidity of this ETH can be restored.

A large number of high-end graphics cards have withdrawn from mining and returned to the market

As the most important graphics card mining public chain Ethereum is converted to PoS mechanism, it is expected that a large number of graphics cards used for Ethereum mining will flow back into the market. The situation where it was difficult to get a card is expected to be greatly alleviated. (Under the premise of no fork)

Can the problem of Ethereum’s high gas cost be solved?

uncertain.

The cost of Ethereum gas is directly determined by market supply and demand. The Merge upgrade cannot fundamentally change the supply limit of Ethereum computing, and is not expected to significantly affect users' demand for Ethereum on-chain computing.

In the short term, the gas cost of Ethereum may still be determined by the overall market heat, whether there are popular projects, and other demand-side fluctuations. If we want to completely improve the problem of high gas costs, we need to wait for Ethereum to make significant improvements on the supply side, which is also the main goal of the next stage of shard chain upgrades.

Although the official currently expects the shard chain upgrade to be launched in 2023, considering the overall difficulty of Ethereum upgrades and the history of frequent delays in previous upgrade plans, let us wait until the Ethereum Foundation is fully prepared before discussing the topic of the next stage of shard upgrades in detail.