Common questions about Ethereum PoS mergers, let’s answer them one by one

Compiled by: Wang Yankun

What is a "merge"?

The "merge" is a network upgrade of Ethereum that aims to transform the actual consensus protocol from Proof of Work (PoW) to Proof of Stake (PoS) consensus mechanism, which is energy-saving, capital-efficient and more secure. When the merge occurs, the current PoW consensus mechanism will be completely abandoned, and all blocks on Ethereum will be generated through the PoS consensus mechanism.

Answer: Lamboshi

When will the merger happen?

Simple answer: The most optimistic (unofficial) estimate right now is sometime in the first quarter of 2022.

Detailed answer: As of the time of writing this article, there is no definite timetable for the "merger".

Eth 1.0’s proof-of-work (PoW) blockchain will undergo two hard forks in 2021, called the Berlin and London upgrades, after which the Ethereum community will fully promote the transition to the Eth 2.0 proof-of-stake (PoS) blockchain.

The Eth 2.0 PoS chain is currently up and running, and before the “merge”, this PoS chain will undergo its first hard fork (codenamed Altair) in June 2021.

ETHGlobal will host the Ethereum virtual scaling Hackaton from April 16 to May 14, 2021. The Eth1-Eth2 merger is one of the topics that contestants can work on during the hackathon.

Based on the results of the prototype built during the ETHGlobal Hackathon and the initial results of the first Eth 2.0 PoS hard fork, it will be decided (in June 2021) whether the Eth 1.0 PoW "Shanghai" hard fork will focus on the Eth 1.0 Ethereum Improvement Proposal (EIP) or make "merging" the top priority. The Shanghai hard fork is currently expected to take place in the first quarter of 2022.

Answered by: /u/Chapo_Rouge, @InsideTheSim

If I hold Ether (ETH), what do I need to do?

You don’t have to do anything! Once the “merge” happens, all ETH in the Eth 1.0 PoW chain will automatically become ETH on the Eth 2.0 PoS chain. There will be no change in the user’s daily experience of using Ethereum - all changes related to the “merge” happen “quietly” and are only related to the consensus mechanism that ensures the security of the Ethereum network.

Answered by: @insideTheSim

After the "merge", can I still stay on the "Ethereum 1.0" chain?

No - because the functionality of 1.0 will no longer exist. After the "merge", the entire Ethereum 1.0 PoW blockchain will become Ethereum 2.0 PoS.

If any nodes continue to mine on the Ethereum 1.0 PoW blockchain, the economic reward for a block will be far less than its operating costs. Since miners are incentivized to operate for profit, it is expected that Eth 1.0 PoW participants will immediately start using their hardware to mine on other non-Ethereum PoW blockchains.

Answer: @InsideTheSimulation

Why did Ethereum switch to PoS consensus mechanism?

Ethereum's current state is using PoW to ensure consensus among thousands of nodes in the network. While PoW is reliable and secure, it consumes a lot of energy. In order to produce a block on the network, miners need to use powerful and energy-intensive GPUs to solve complex mathematical problems.

PoS, on the other hand, ensures network security in another way. In the PoS mechanism, anyone who holds 32 ETH can become a validator, which is also called a node that participates in the network's consensus algorithm. Completing a block requires 2/3 of all active validators to sign it. If malicious actors try to revert a confirmed block by using a large number of validators (equivalent to a 51% attack in PoW), their funds will be slashed - meaning they will lose a portion of the staked ETH. This makes attacks extremely expensive; just like in a PoW system, if someone uses mining hardware to attack the network, the hardware will catch fire and be destroyed.

PoS does not require the same energy-intensive hardware as PoW mining. Any relatively new consumer electronics hardware should be able to run the software required to stake a 32 ETH node. If you stake more than 32 ETH, the protocol will assign you multiple "validator slots", but you can still run them on a single computer, just with increasingly demanding hardware. Most estimates put the expected energy savings from Ethereum's switch to PoS at 99%. Source 1, Source 2

See also:

• A Proof of Stake Design Philosophy

• Why Proof of Stake (Nov 2020)

Answered by: /u/Chapo_Rouge

How decentralized is PoS compared to PoW?

In addition to improved efficiency, the main motivations for switching to PoS include the increased decentralization and censorship resistance that PoS provides.

PoW and PoS do have a lot of similarities. They are both completely permissionless systems that anyone can participate in. Both rely on economic Sybil resistance: your influence on the network, and therefore the rewards you receive, is proportional to the amount of economic resources you invest (computer hardware and electricity in PoW, tokens in PoS). But there are important differences between the two.

To become a miner in a PoW network, you need to purchase mining hardware (usually a dedicated mining machine in the form of ASIC), have access to cheap and reliable energy, and have a high level of technical skills to operate and maintain a "mining farm". Small-scale mining is possible, but economies of scale make it difficult to compete with larger, wealthier mining farms. In addition, due to the huge power consumption, centralized authorities can easily discover mining farms and shut them down or force them to participate in attacks.

PoS, especially the PoS mechanism that Ethereum will adopt, is much friendlier to small-scale participants. To become a validator and start staking, you only need 32 ETH (if your holdings are lower than this number, decentralized staking fund pool technology based on multi-party computing is under development). The only hardware you need to participate in the PoS consensus is a modern consumer electronic product with decent performance (such as a laptop). Larger amounts of staked ETH require more hardware to handle more shards, but only staking millions of ETH will put a burden on your hardware. Staking can be done from any location, and if you encounter a delay of a few hundred milliseconds, it will not cause you a big financial loss.

What is the difference between the PoS mechanism and the delegated proof of stake (dPoS) adopted by other blockchain projects?

DPoS is a consensus mechanism, and often a governance mechanism, that was pioneered by Bitshares and has been adopted in many blockchains. The consensus of a DPoS chain is run by a small number of nodes called block producers (BPs) (for example, EOS has 21 BPs). To become a BP, you must first register as a representative and then invite token holders to vote for you. The representative who receives the most votes will become a BP.

The main problems with DPoS are twofold:

1. The power of block production is concentrated in the hands of 21 representatives, which poses a high risk of centralization; even if there is an election process, representatives can still seize power and start censoring transactions they don’t like, including transactions from those who voted against them.

2. Token voting is prone to collusion and bribery attacks.

The above articles are discussed in more detail in the following articles:

• Notes on Blockchain Governance

• Governance Part 2: Plutocracy Is Still Bad

• On Collusion

These concerns are not just theoretical; wealthy EOS system participants have been caught voting for each other, or exchanging compensation.

The PoS that will be implemented in Ethereum does not have the concept of token voting; instead, users own nodes and stake their own tokens directly. Of course, users are free to "vote with their feet" for other participants by participating in other people's staking pools. The key difference between the two is that Ethereum's PoS is not easily corrupted by bribery and collusion like other PoS, because the incentives are in the following way: if you join a staking pool with good performance, you will receive higher rewards; if you join a staking pool that attacks the network and has assets confiscated as a result, you will not be able to recover all your funds. This is different from token voting, in which people who vote for a malicious representative will not suffer any penalties, and people who do not vote for that representative will not suffer any penalties. Ethereum's PoS generates a completely different and safer set of incentives, and is further decentralized because a large number of stakers choose not to join the fund pool and do the staking operation themselves.

How do I participate in PoS on Ethereum?

There are many ways to participate in PoS on Ethereum. The Getting Started tutorials on /r/ethstaker are a wealth of resources for beginners. If you prefer to watch a video, you can check out Superphiz’s Intro to Eth2 & Staking. This presentation from ETHGlobal is a good introduction for beginners.

Answer: Lamboshi

How will PoS reduce the energy consumption of the Ethereum blockchain network?

In a PoW chain, whoever solves a block first gets rewarded. In short, PoW is a race. If you have more hashrate than your competitors, you have a higher chance of winning. The end result of this arms race is that PoW miners run as many GPUs as possible at 100% hardware load 24 hours a day. They do everything they can to get block rewards, and extreme power requirements grow dramatically.

In a PoS chain, block proposers are chosen randomly — eliminating the need for an arms race entirely. There is no way for any particular node to increase its overview of blocks that are chosen to mine — so there is no need to expend more and more resources to improve its chances of competing.

Given that PoS nodes are expected to use 99% (or more) less energy than PoW miners, PoS represents a quantum leap in energy efficiency for the blockchain industry.

Answered by: Lamboshi, @InsideTheSim

Can “merger” solve the problem of high gas fees (network fees)?

No. "Merge" is limited to upgrading the Ethereum consensus mechanism. In practice, it cannot solve any current user experience problems of Ethereum. Future upgrade roadmaps of Ethereum 2.0, such as sharding, will directly help improve the Gas fee problem. Currently, most people in the Ethereum community believe that sharding is considered to have a lower priority than "merge" - merging can eliminate the problem of PoW wasting energy.

Answer: Lamboshi

After the “merger”, how will the fees paid to Ethereum miners change?

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What is the Cliffening?

“The Cliffening” is the name given by the community to the action of drastically reducing the issuance of ETH, which will be triggered once the “merge” occurs and Ethereum is fully upgraded to the PoS consensus algorithm. “The Cliffening” is similar to the popular term “Halvening” in the Bitcoin network. The Bitcoin blockchain halves the issuance of Bitcoin every four years, while Ethereum reduces the issuance by about 90% at the time of the “merge”. The scale of Bitcoin’s three “halvings” was completed in one go! The issuance reduction completed by Ethereum in one go is equivalent to the work that the Bitcoin network can complete in 12 years.

Under the current PoW model, Ethereum issues approximately 13,500 ETH per day, which is approximately 4.3% of the total ETH supply per year. However, the PoS issuance model is determined by how much ETH is actively staked on the network. Current forecasts show that when the "merge" occurs, annual issuance will drop to between 0.3% and 0.4%.

For comparison, Bitcoin currently issues 900 BTC per day, or about 1.7% of the total BTC supply each year. The next two halvings will reduce Bitcoin's annual issuance to about 0.8% in 2024 and 0.4% in 2028. With Ethereum's annual issuance expected to fall to between 0.3% and 0.4% after the "merger," Bitcoin's issuance won't fall to roughly the same proportion as Ethereum's issuance until 2028.

When “The Cliffening” works in conjunction with the BASEFEE burn mechanism upgraded by the EIP-1559 proposal (which will be included in the London hard fork of the Ethereum 1.0 PoW chain in the summer of 2021), it is expected that Ethereum issuance will actually enter a deflationary phase during periods of higher user activity.

Answered by: u/Bob-Rossi, u/decibels42

At present, does the "merger" bring any risks?

There are always risks associated with making large-scale changes to a protocol with hundreds of billions of dollars of assets tied up in it. Think of a “merge” as changing the engine of an airplane mid-flight. Thankfully, the Beacon Chain (the current Ethereum PoS chain) has been running without issues since December 2020.

There are currently 4 independent clients operating PoS Ethereum nodes. This means that if PoS node operators encounter problems with a given implementation, they will be able to switch to other clients. The current PoS network is the result of years of research and hard work. Participants can rest assured that before the "merge" occurs, the Ethereum core team will exhaustively review the code used, battle test it, and then check it again.

Answered by: Lamboshi, @InsideTheSim

Can I test the PoS Ethereum network?

If you are interested in helping to move the Merge forward: see Rayonism for details on how to help.

If you are a dapp developer: Consider deploying your dapp to a testnet at the ETHGlobal Scaling Ethereum hackathon (April 16th - May 14th). The more the better!

If you are an L2 developer or protocol developer willing to help drive the “merge” process: Please recommend yourself in the Eth R&D discord channel!

If you are an Ethereum user: Be on the lookout for announcements of your favorite dapps that will be deployed on the upcoming testnet. Help your favorite developers field-test and iron out bugs by using their dapps within a safe testing environment.

Answered by: TwoOfSpades