It seems like it has been ages since we started hearing about the transition of Ethereum from PoW to PoS, i.e. Ethereum Merge. Today, Sept 15 2022, 06:42:59 AM +UTC, marks the time it finally happened.
So, what happened in the merge? We had the beacon chain, which launched in December 2020, and the Ethereum chain, which was launched in July 2015.
Both chains had different consensus mechanisms. As of the merge, only PoS will be around, PoW will stop operating. As per EIP-3675.
Other than this, EIP-4399 is also implemented. What this does is replaces the semantics of the return value of existing DIFFICULTY (0x44) opcode and renames the opcode to PREVRANDAO (0x44).
It helps in reducing energy consumption in the ecosystem. Because now we have PoS, which doesn't require GPUs. The energy consumption is reduced by ~99.95%. Pre-merge Ethereum consumed 95TW/h when the usage was at its peak, i.e. in February 2022. In Summer 2022, the consumption was closer to 60TW/h. Now it has been reduced to 0.01TW/h.
The community is thrilled to see this change, $60K for the first transaction after the merge.
The Block time before the merge was ~13 seconds; post-merge blocks are mined with a difference of ~12 seconds, and hence ~1 second is reduced.
No, This update is to reduce the carbon emission rate of this world by ~0.2%. Although the Ethereum Foundation has stated that after the merge, the block production rate is going to be roughly 10% more than before. However, this is a minor change and will not be noticeable.
The Foundation said:
“Though some slight changes exist, transaction speed will mostly remain the same on layer 1. This is a fairly insignificant change and is unlikely to be noticed by users.”
A common sentiment is that the Merge will reduce Ethereum’s gas fee. Although nobody wants high gas fees, the merge is not supposed to decrease it. Rather, the upcoming major upgrade in Ethereum, "The Shanghai upgrade, " will.
The Shanghai fork expected to be in early 2023 is critical for The Merge as it is responsible for the lower gas fee in Ethereum. This update will also let the validators withdraw their staking funds from the beacon chain.
According to Ethereum Foundation, "Eth Staker’s funds will remain frozen and inaccessible for at least 6–12 months following The Merge. Up to the Shanghai upgrade, ETH will continue to be staked along with staking prizes and freshly released tokens”.
After the Merge, Ethereum’s monetary policy will change. This means post Merge will make ETH less deflationary. This is because less cryptocurrency will be rewarded to the stakers. With PoW in Ethereum, the total issuance of Eth per day is around 13000. Now with PoS will get reduced to about 1600 per day. But this doesn’t imply that the Merge is responsible for making Eth deflationary.
After EIP-1559, an amount of the base fee paid in the transaction fee is also get burned. So the effect of burning frequently more than the issuance is what will make Eth a deflationary currency over a period of time.
See the status at Ultrasound.money.
All the nodes after post-merge need to run both the clients of consensus as well as the execution layer. For the selection of clients, the nodes must consider the risks and consequences of each El and Cl client. For the detailed analysis of Consensus and Execution layer clients, you may refer to this article.
After the merge, the entire Ethereum blockchain has two identical instances. All ETH, tokens and transactions exist in POS and POW, and all DeFi positions exist in POS and POW.
Next, within 20 hours, EthereumPoW will publish the 1-hour Count Down Timer for the ETHW mainnet release. The chainID is yet to be announced, which will accelerate the process.
Also read, Why is Resource Pricing a Big Deal in Blockchain?