Correctly understand Ethereum PoS merger: what changes will it bring?

1/21 Ethereum is about to receive a series of feature enhancements that will leave other blockchains (especially Bitcoin) far behind. This series of updates is intended to reduce the information asymmetry outside the outside world about the significance of The Merge and help everyone understand how this is close to changing the blockchain space.

The 2/21 merge is a network upgrade for Ethereum that aims to transform the underlying consensus protocol from Proof-of-Work (PoW) to a Proof-of-Stake (PoS) consensus mechanism that is energy-efficient, capital-efficient, and more secure.

3/21 I hope you have understood what PoS is.

If you don’t know what PoS is and still don’t understand why the economic incentive mechanism of PoS is more consistent than PoW, you can read this post.

4/21 First of all, it is important to point out that as a normal user, your experience using Ethereum will not change.
The merger is an upgrade to the blockchain protocol layer, and the data/application layer will not be affected.

5/21 This means that every dApp, protocol, or account that existed on Ethereum before the merge will continue to exist and function as before.

In addition, the transaction layer management approved by the EIP1559 proposal is already in operation and the merger will not change it in any way.

The 6/21 merge will only affect validators, who will replace miners in reaching agreement on which transactions are included in the blockchain's canonical history.

7/21 PoS is already a reality, it just hasn’t been internalized yet.

The “Beacon Chain,” also known as the Eth2 network, has already completed all the heavy lifting of researching, detailing, and developing a new consensus mechanism.

8/21 The beacon chain is a completely independent blockchain network that runs the PoS consensus layer.

It runs in parallel with the current Ethereum mainnet and only processes the consensus layer of the protocol, while its data and application layers are empty.

9/21 It is necessary to keep the PoS chain isolated from the main network so that the risks generated by the new consensus mechanism do not affect the Ethereum main chain during its deployment.

Since its launch in November 2020, the beacon chain has been running smoothly without any issues.

10/21 The new Ethereum PoS consensus layer has about 120,000 validators who have staked a total of about 3.8 million ETH (about 3.3% of the circulating supply of ETH). It can now build a good Lindy effect, so the Ethereum core team can safely merge it with the mainnet.

Lianwen Note: The Lindy Effect means that for something that will self-destruct, the expected value of its remaining time will decrease with each additional day it exists; while for something that will not self-destruct, the expected value of its remaining time will increase with each additional day it exists.

The changes required on 11/21, including the current Ethereum network transition to a PoS consensus mechanism, are a protocol integration between data/applications on the existing consensus layer:

• Incorporate data history blocks

• Proposing a new block

• Announce/finalize block header value

12/21 For both Eth1 and Eth2 users, this is just a minor adjustment, and three beacon chain users have demonstrated executing Eth1 transactions in an Eth2 environment.

• Teku

• Lighthouse

• Prysm

13/21 Both the Berlin and London upgrades will be completed in 2021, and it is currently expected that we will be ready for the “merge” sometime in late Q4 2021 or early Q1 2022.

The 14/21 "Merger" will implement the second crypto-economic upgrade of ETH as an asset, putting years of crypto-economic research and development results into practice, and will bring super strong monetary value to ETH.

15/21 As PoW exits the historical stage of Ethereum, ETH will experience a "cliffening", and its issuance will be reduced by about 90% during the "merger".

For comparison, it would take 12 years for Bitcoin to achieve such a reduction in its issuance through “halving”.

16/21 The EIP1559 proposal upgrade and the PoS mechanism will work together to make ETH a deflationary asset.

17/21 Although it sounds like magic, you don’t need the courage of a Vanuatu diver to face the “cliff adjustment”.

In the PoS mechanism, bad actors are punished.

18/21 Given that participants have less incentive to do evil, the positive reinforcement of the network (difficulty of block issuance) will be reduced despite a higher level of network security.

19/21 In addition to Ethereum having become the public chain with the highest asset value, it is also the public chain with the most active development activities. The next upgrade will make ETH a high-premium storage asset.

20/21 Thank you to all the community members who posted newsletters to keep users like me informed, @evan_van_ness, @benjaminion_xyz, @dannyryan.

21/21 For more detailed information about the merger, please click here.
This tweet chain was inspired by one of the articles.