What is the Ethereum Merge?

What will the Merge change?

  1. Ethereum’s energy consumption will be drastically decreased. PoS not only represents a way more eco-friendly alternative to PoW. Proof-of-Stake doesn’t require miners to consume energy in a duplicative process, which is all miners competing for the same puzzle.
  2. Ethereum’s security will potentially become more robust. Given PoS introduces the concept of Slashing, validators have no incentive to act maliciously, but they do have incentives to behave accordingly and help to maintain a healthy and secure network. These incentives being in the form of a stable APR with no slashing of their funds.
  3. ETH inflation will be reduced, potentially making ETH deflationary. ETH issuance will decrease, and as demand for blockspace goes up, the more ETH will likely be burned (EIP 1559).

What will the Merge NOT change?

  1. Decrease Gas Fees. Gas fees are a product of the demand for blockspace. Sharding will be the upgrade taking care of decreasing gas fees, as it will introduce “more blockspace” for transactions and rollups to store all necessary data.
  2. Increase Scalability. The Ethereum Merge will have no effect on scalability whatsoever; Sharding will be the hero for this one as well, coming after the Shangai upgrade.
  3. Allow stakers to withdraw their staked ETH. Ethereum withdrawals for stakers will not become available until the Shanghai upgrade, which will likely take place 6–12 months after the Merge.

Closing thoughts