The Ethereum Proof-of-Stake Merge
White Star Capital Digital Asset Fund - newsletter #92
What is the Merge?
The Merge represents the joining of the existing execution layer of Ethereum (the Mainnet we use today) with its new proof-of-stake consensus layer, the Beacon Chain. It eliminates the need for energy-intensive mining and instead secures the network using staked ETH.
It's important to remember that initially, the Beacon Chain shipped separately from Mainnet. Ethereum Mainnet - with all it's accounts, balances, smart contracts, and blockchain state - continues to be secured by proof-of-work, even while the Beacon Chain runs in parallel using proof-of-stake. The approaching Merge is when these two systems finally come together, and proof-of-work is replaced permanently by proof-of-stake.
The Merge will also set the stage for further scalability upgrades not possible under proof-of-work, bringing Ethereum one step closer to achieving full scale, security, and sustainability.
What happened to Eth 2.0?
The term 'Eth2' has been deprecated as we approach The Merge. After merging 'Eth1' and 'Eth2' into a single chain, there will no longer be two distinct Ethereum networks; there will only be Ethereum. To limit confusion, the community has updated these terms:
-'Eth1' is now the 'execution layer', which handles transactions and execution.
-'Eth2' is now the 'consensus layer', which handles proof-of-stake consensus.
These terminology updates only change naming conventions; this does not alter Ethereum's goals or roadmap.
The Roadmap after the Merge
After the Ethereum merge, there will be many more upgrades to the network: the Surge, the Verge, the Purge, and the Splurge:
The Surge is a massive increase in the scalability for rollups through sharding. According to Buterin, this will allow for transactions to happen much more cheaply. The upgrade should reduce the fees while still maintaining a high level of security on the blockchain.
The Verge is a planned transition from Merkle trees to Verkle trees. You can think of them as “databases” or “state machines” where all the data of the Ethereum blockchain is stored. The Ethereum blockchain is already big and it keeps getting bigger every day. The Verge implementation should allow for a simpler validation on the blockchain. This should in turn make validation scalable, faster, and much easier to set up. It should further decentralize the network.
The Purge means that not all nodes have to permanently store all of the historical blocks. Instead, clients will stop storing history that is more than one year old. This means that hardware requirements for nodes will decrease and the bandwidth of the network will reduce.
The Splurge consists of miscellaneous upgrades that should simplify the use of Ethereum and make it more accessible to an average user.
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