An ELI5 Guide To ETH Merge

1. The Ethereum Merge involves a shift from Proof of Work to Proof of Stake. While this would not directly lower the notoriously high gas fees associated with the use of the Ethereum blockchain, this will facilitate the implementation of sharding, which may consequently lead to reduced gas prices.
2. Incidentally, the PoS chain will produce blocks at a slightly faster rate than currently (12 second blocks compared to on average 13 second blocks).
3. Although ETH mining will no longer be around, the Merge brings about other opportunities. For instance, we can participate in staking without having a substantial amount of ETH by using a pool such as Rockpool or Lido, or just buying rETH or stETH.
4. The Merge helps in making ETH a deflationary asset. Daily issuance is dropping by ~90%. Add the fee burn to that and Eth will be permanently deflationary.
5. Ethereum nears major upgrade as the Ropsten testnet is set to undergo merge on June 8.
6. In regards to the testnet merge, it plays a role in energy conservation because it will send a message to power down the GPUs doing PoW mining. So, there isn’t any wasted electricity.
7. Vitalik Buterin has put word that the Merge will happen in August 2022. However, should unforeseen delays occur, the merge would be postponed to September or October. Which demonstrates an important lesson from Buterin: always underpromise so that you can overdeliver.
8. However, the 4th shadow fork did proceed without a hitch in May 2022, so hopefully the testnet merge will go smoothly too.
9. Ethereum is more than just the layer 1 chain. In the short term, its scaling will come from the L2 chains like Optimism, Arbitrum, zkSync etc. The merge will bring about an upgrade known as Danksharding that was mentioned in point 1 and is being worked on.
10. The Merge will lay the foundations to make it cheaper to run layer 2 solutions (such as Zk Rollups) in the future.
11. Speaking of rollups, the Optimism chain is a layer 2 rollup on Ethereum. As a layer 2 feature, it benefits from all of the security and decentralisation that is characteristic of ETH but boasts faster speeds and cheaper transactions. It seems a promising venture for us to undertake because it has already facilitated Round 1 of airdrops to reward active users who participated keenly in its on-chain activities. More airdrops are scheduled to be launched.
12. L2 solutions, namely ZK/optimistic rollups and sharding, can lower fees but these will come much after the Merge.
13. Btw, there is no ETH 2.0. It’s just the Merge.

Important Dates

• June 8 - The Ropsten testnet, which aims to demonstrate the actual merge between Ethereum and the Beacon Chain, is slated to happen.
• June to August - Goerli and Sepolia testnets will follow suit.
• August - Ethereum Merge aka Ethereum Consensus Layer is expected to be launched, failing which a "difficulty bomb" that intentionally slows down the current Ethereum network will be activated
• 6-12 months after the Merge - Another software upgrade
• 2023 - Shard chains launched

What the ETH Merge can do

• reduce the impact of the ETH blockchain on the environment
• improve transaction speeds slightly
• make ETH a deflationary asset

What the Merge can’t do

• reduce gas fees. Best to use Layer 2 solutions like Optimism and Arbitrum if cutting cost is your priority.
• unstake the ETH you staked previously. Unstaking of ETH can only happen six months after the merge - and you cannot unstake all your ETH at once. You got to wait in line to unstake your ETH.

Get your ETH from FireFaucet here.

Cover image from: https://commons.wikimedia.org/wiki/File:Ethereum_Wallet_for_Cryptocurrency_Storage.jpg

This post is cross-posted on my blog: https://diaperfinancingfund.blogspot.com/2022/05/an-eli5-guide-to-eth-merge.html