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Dear Bankless Nation 🏴,
The Merge is here! The Merge is here!
In less than two weeks, this call should be heard throughout the cryptoverse, but nowhere will it echo and resonate as loudly as in the Ethereum Ecosystem. After all, the Merge is all about the Ethereum network, and its long-awaited transition from its Proof-of-Work consensus mechanism to Proof-of-Stake. Based on current estimates, the Merge is expected to happen on September 13, 2022.
The Merge refers to the merger of the Proof-of-Stake (PoS) Beacon Chain with the Proof-of-Work (PoW) mainnet chain. To understand the Merge, it helps to imagine two lanes of network traffic running parallel to each other. In one lane, you have the PoW chain, the same chain Ethereum users have been interacting with since genesis. The Beacon Chain runs parallel to this PoW chain, and once the Merge happens, the PoS chain essentially merges into mainnet and the Ethereum network becomes PoS mainnet. That’s a huge oversimplification, of course, but if all goes smoothly no one should really even notice a difference.
Will it go smoothly? Although there have been a few hiccups, all signs point to a successful Merge. The PoS Beacon Chain launched on December 1, 2020, and since that time Ethereum developers have been conducting testing and hunting for bugs. Over the past many months, simulations of the Merge have run on Ethereum’s various testnets, and those were successful, even if there were a few unexpected bugs.
When the Merge happens, PoW will no longer serve as the consensus mechanism for Ethereum, and the PoS chain becomes the means of block production. The benefits to the Merge cannot be overstated: a 99.95% reduction in energy use, the possibility of sharding, which permit further network capacity and scaling, and a huge reduction in the issuance of new ETH.
The Merge is complex, so we’re devoting our next three issues to it. This first issue is going to get you up to speed on the terms and definitions you need to know, offer a history of PoS, compare PoW and PoS, review the changes to ETH tokenomics, and conclude by offering some speculation on what may occur during the Merge. The later issues will explore the Merge and its implications in greater detail, so be sure to keep an eye out for the next issue in two weeks.
While we don’t know for sure what the Merge may bring, you can be sure the DeFi Download will be here to cover it. Thanks for joining us for the Greatest Show in Crypto!
Contributors: BanklessDAO Writers Guild (Ap0ll0517, Elemental, helloashpreet, Hiro Kennelly, oxdog, siddhearta, Teeleroo, Jake and Stake)
From ‘Castle Ethereum,’ by Perchy
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