The Ethereum Merge|A Full Introduction to the Ethereum Merge

What is the Merge?

The Merge is an event through which the Ethereum blockchain transitions from Proof of Work (PoW) to Proof of Stake (PoS).

What is the Beacon Chain?

The Beacon Chain is a fully independent and decentralized network that runs in parallel with the Ethereum mainnet. Instead of PoW, which is Ethereum’s current consensus mechanism, the network uses PoS. Aiming to enable Ethereum’s transition from PoW to PoS, the Beacon Chain is the first step of the Merge.

What led to the Merge?

PoW has always been criticized for its heavy energy consumption, and Ethereum must break away from this shackle if it wishes to become a super ecosystem in the crypto market. As such, the network has decided to shift to PoS, which will reduce energy consumption by about 99.95%.

When will the Merge take place?

On August 12, Ethereum founder Vitalik tweeted that “the terminal total difficulty has been set to 58750000000000000000000. Bordel.wtf predicts the merge will happen around September 15, though the exact date depends on hashrate.”

What changes will the Merge bring?

1. The annual ETH inflation rate will decrease. After the Merge, the annual ETH inflation rate will go from 4.3% to 0.43%. With PoS, the ETH issuance will be reduced by over 90%.

Who will be affected?

1. ETH miners. The Merge will put an end to PoW mining on the Ethereum network. As the transition to PoS will make mining (staking) much more accessible to regular users, new ETH miners will no longer have to meet the demanding hardware requirements. After the Merge, new miners will validate and protect the Ethereum network by staking ETH, which will also earn them the corresponding ETH reward. Existing PoW miners on the network are the most affected group of the Merge. As Ethereum shifts to PoS after the Merge, GPU miners will have to turn to alternative PoW chains, and their mining machines may no longer be used to mine ETH.

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