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The Ethereum Merge - What has changed?
Shift from PoW to PoS. What's up with Ethereum? Effect on NFTs and L2s
Gm Gm web3 frens🙏🙏
While people (in India) have been busy learning new Garba steps and counting days to eat that scrumptious Chicken Biryani, a lot has happened in the web3 world!👀👀
To start with :
The world’s biggest cryptocurrency exchange - Binance was hit by $570 million hack.🥶
Binance completed the first $LUNC burn, burning all trading fees collected from LUNC spot and margin trading pairs.😵
The Ethereum merge happened [P.S. Finally]🥳
Ethereum proof-of-stake client caught a bug during a code review that could lead to EVM chains becoming stuck due to an excess gas error😧😧
The Merge - one of the most historic events in blockchain upgrade. Before we delve into what has changed, let’s get the basics right.🤗
What’s the merge?🤔
The Merge is Ethereum's transition to proof-of-stake(PoS) consensus, officially deprecating proof-of-work(PoW). Goodbye Miners, hello Stakers🤝
The merge thereby reduced the energy consumption by ~99.95%. That's like Finland suddenly shutting off its power grid 😛(Source).
It was executed at 2:45 am EST on September 15, 2022. It was truly an exciting step in realizing Ethereum’s vision—more scalability, security, and sustainability.💯
As Ethereum foundation puts it themselves:
The Merge represents the joining of the existing execution layer of Ethereum (the mainnet we use today) with its new proof-of-stake consensus layer – the Beacon Chain.
To know more details on what went into merging Ethereum Mainnet with a separate proof-of-stake blockchain (the Beacon Chain), checkout the official blog by Ethereum.
It was phenomenal to see such a complex process get executed so seamlessly, when so many things could’ve gone wrong.😅 The cost of failure would’ve been immense – billions of $$$ and years of engineering efforts would have gone down the drain. But, the merge was a huge success🥳🥳
What has changed though?🤔
Ethereum is ~10% faster on Proof of Stake. Previously blocks were produced every 13.3 seconds on average. Now, blocks are produced every 12 seconds💯
What hasn’t changed?🤔
📌Lower fees? No😟
Not just yet! It was never the goal. Lower fees may eventually be facilitated by infrastructure enhancements in the merge. But it won’t happen immediately.
📌Transaction speeds accelerated by The Merge😲😲
Actually not. 😩There has been some improvement, but nothing groundbreaking for Layer 1 chains.
What happened to Eth2?🤔
The term eth2 is deprecated. To avoid any confusions and misconceptions,
Eth1 is now the execution layer - handles transactions and execution.🤙
Eth2 is now the consensus layer - handles proof-of-stake consensus.🤙
What does The Merge mean for NFTs?🤔
NFTs need a considerable amount of block space and transaction speed when a collection’s minting is happening. Let’s understand the impact on Block time
📌With PoW, the block time (how long it takes to produce a block with transactions) varied between 12-15 secs. This implied that the number of daily blocks would vary a lot and thus the number of transactions that the network can handle would also vary.
📌With PoS the block time is fixed as 12 secs. Looking at the below chart, clearly the number of daily blocks has increased post the Merge, and the block time is practically stable. Implies an increased supply of block space for transactions.
There’s no denying that The Merge was a victory, as plenty of celebratory memes can attest, but it’s a long way from resolving the industry’s persistent issues.
So, What’s next?🤔
While this is the first step in Ethereum's big journey towards being a scalable and secure system of the future web, there are 4 more steps to go
The Surge - Scaling 📈
This phase will bring sharding to the protocol. It’s a scaling solution that would break the network into multiple partitions called shards, designed to spread the computational load on the mainnet.
The Verge - Optimize data storage💻
This phase is intended to optimize data storage for Ethereum nodes by implementing Verkle trees and stateless clients. These technical upgrades will allow users to become network validators without having to store extensive amounts of data on their machines. Indeed a great step towards decentralization.
Similarly, this upgrade also concerns with data storage for validators. Essentially not requiring nodes to store history and it will reduce hard drive space that’s required for the validators, streamlining the network congestion.
The Splurge 😍
The last upgrade in the pipeline - it’s intended to deliver a string of miscellaneous updates that are made to ensure the overall smoothness of how the network runs.
And as Vitalik says
“All of the other fun stuff”
Until next time, Ciao👋👋
Spoiler alert for the next post: 🤑🤑
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