What is the Ethereum Merge?

The success of the Ropsten test lights the way for the full Merge

The original article was published on June 2nd, 2022.

This story was updated on June 8th following the successful Ropsten testnet merge. This was updated again on July 11th following the successful Sepolia testnet merge.

The 8th of June, 2022, will go down as an important milestone in the journey towards the Ethereum Merge. The Ropsten testnet merge, which was seen as a final dress rehearsal before the full Merge, showed developers that everything is in place and ready to go. But what is the Ethereum Merge and what will it achieve?

Summary

  • The Ropsten merge was executed June 8th. It was a dress rehearsal for the main event and gave the Ethereum team the chance to run tests and simulations.
  • Benefits of the Merge include faster and cheaper transactions, reductions in energy consumption for validations, deactivation of the Difficulty Time Bomb and a potential spike in the price of ETH.
  • The Ropsten testnet is a sandbox network where developers can test their code and updates in a safe environment that won’t affect the Ethereum mainnet.
  • The successful Sepolia test was carried on July 6th.

Ethereum was founded and developed in December 2013 by Vitalik Buterin, alongside Anthony Di Iorio, Mihai Alisie, Amir Chetrit and Charles Hoskinson. Hoskinson later went on to found the Cardano blockchain platform.

Since then, Ethereum has grown to be the second largest blockchain by cryptocurrency market cap, behind Bitcoin. ETH, the network’s native token, is the method of payment people use to make transactions on the blockchain.

While Ethereum is the second largest network by the current value of its cryptocurrency, it is, by most other metrics, the biggest blockchain in the world. In 2021, it surpassed Bitcoin in transaction numbers. The network is number one for the most number of dapps built on it. Ethereum also takes first place for the number of NFTs that are developed and traded on its blockchain.

Now, reports have emerged that Ethereum is close to completing the fabled Merge, apparently as soon as August this year. The recent successful Ropsten testnet trial run was another step closer towards Ethereum developers hitting this timeline.

First off, what is the Ethereum Merge and why is it happening?

The Merge, as the Ethereum community calls it, is the blockchain’s shift from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) model. This means that instead of people needing to run powerful computer processes in order to mine ETH, they can deposit ETH in exchange for rewards.

Pre-Merge, the Ethereum Mainnet runs in parallel with the Beacon Chain. The former functions as a PoW system while the latter is PoS. With the Merge, these two networks will come together and operate as one structure.

Ethereum’s developers are pushing forward with the Merge for two main reasons:

  • Costs. These things often come down to money and value. By switching from PoW to PoS, the issuance of ETH is expected to drop by about 90%. Less ETH available and stable demand leads to higher prices.
  • The Difficulty Time Bomb. Some of the phrasing surrounding the Merge starts to sound a bit like a disaster film. But in a nutshell, the Difficulty Time Bomb refers to an element encoded within the blockchain that intentionally slows down the network. It was supposed to act as encouragement for developers to work towards a PoS model. By switching over to this system, they will negate the effects of the Time Bomb.

Who is carrying out the Merge, and when?

Ethereum developers are currently undertaking the work. Tim Beiko, Community Manager at the Ethereum Foundation, is one of the main people carrying out development on the Merge. Core developer Preston Van Loon has also been at the forefront of talk around this piece of news. ‘As far as we know, if everything goes to plan, August – it just makes sense. If we don’t have to move [the Difficulty Bomb], let’s do it as soon as we can.’

Justin Drake, another member of the Ethereum Foundation, said at the Permissionless Conference on May 19th, that there’s a ‘strong desire to make this happen before the Difficulty Time Bomb in August’. 

The Ethereum Foundation operates as a not-for-profit organization and the main task is the management of the Ethereum blockchain. Alongside this, the Foundation promotes, researches and educates about all things blockchain, web3 and, of course, Ethereum.

Justin Drake’s “before August” date seems to be the deadline for the Merge towards which everyone is working. So expect it to happen any time over the next two or three months.

What difference will the Merge make?

As mentioned above, there are two main reasons for the Merge: value creation and a safe deactivation of the Difficulty Time Bomb.

But there are more benefits that users and the wider world can expect post-June 8th:

  • Reduction in the amount of energy required for transaction validation. Some sources say that transactions will require ~99.95% less energy after the Merge takes place.
  • Long-term sustainability is a key reason for the Merge. The changes that Ethereum’s developers make now will have long-term benefits and enable the team to move on to the next stages in their roadmap. The post-merge upgrades will not be possible without the Merge. 

Unfortunately, as Tim Beiko told Fortune magazine, the Merge will not dramatically reduce gas fees immediately. These reductions will (apparently) happen next year, when Shard Chains are introduced. These will make Ethereum more scalable and should cut down on the congestion issues that every Ethereum user has come to know, and pay for.

The Ropsten Test

The dress rehearsal went almost as smoothly as the development team hoped. Ethereum Foundation developer Parithosh Jayanthi noted how that ‘the Ropsten testnet hit terminal total difficulty (TTD) at ~16:00 UTC’.

Source: Twitter

While there were a couple of bugs, the team has now seen them and has plans to deal with them.

Source: Twitter

Ultimately, the test was a success and the development team is excitedly viewing it as another huge step in the move towards the full Merge.

Source: Twitter

Developers will be monitoring the network over the next few weeks in case any unexpected issues arise. And the Ethereum foundation will now move on to test-merging the Goerli and Sepolia chains before the main Merge is executed.

The Sepolia Test

Updated: July 11th

Ethereum’s long-awaited Merge is now just around the corner. Following the successful Sepolia testnet merge, there is one more big experiment to carry out: the Goerli testnet. Once that’s complete, the next big hurdle is the final Merge.

Developers migrated the Sepolia testnet on July 6th. It was one more chance for the team behind Ethereum to see how successfully they could integrate an existing network with the main Ethereum blockchain.

Reports so far suggest the test was largely successful. 25%-30% of validators went offline immediately following the merge. But this was due to incorrect configurations and the team has rectified the problem.

‘There’s no client bug,’ reported Terence Tsao, an Ethereum core developer. Tsao went on to make a valid point about the nature of testing: ‘This is what testnets are. To enable interested parties to test their setups and configs. Better now than the mainnet’.   

Critics and fans of Ethereum’s move to PoS have now turned their attention to the broader issues of security and energy efficiency. Detractors of the Merge say the transition will make the network less decentralized and therefore more vulnerable to corporate capture.

A letter shared by the Bitcoin Mining Council and signed by prominent members of the Bitcoin community, claims that ‘Proof of Stake is not a “mining technology”. It is a technique to determine authority over a distributed ledger, but it does not achieve decentralized distribution.’

The co-founders of both Ripple and Solana have supported calls for Bitcoin to move away from its PoW model. In light of the environmental impact of bitcoin mining, Chris Larsen and Anatoly Yakovenko think the blockchain should move to PoS.

Balancing security and energy efficiency is a difficult job that blockchains will need to contend with as the technology grows. How much importance each of us attaches to both factors is a personal choice and one that we should all examine together.

Timelines are liable to change

As the facts change, so will the story. With this in mind, we will update this article when a firm date for the full Merge is announced. We will also report on any other new information that hits the airwaves so stay tuned to our blog and Twitter feed to stay up to date with everything web3. Follow the fortunes of ETH in the run up to the Merge with our Token Explorer and check the performance of Ethereum-based dapps in our rankings pages.

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