The Ethereum merge was SUCCESSFULLY completed over the last week.
The monumental event stirred a frenzy across the crypto space in anticipation, and today we’ll cover what exactly has changed to benefit the Ethereum network.
Core Merge Changes So Far
The change from Proof-of-Work to Proof-of-Stake is the most significant change with the Ethereum merge. Now the Eth network no longer requires the work of miners and their computing power as well as high levels of energy to maintain the network.
Ethereum can now be staked and users can earn a yield on their ETH, making it a more desirable and dynamic asset to own/hold.
Ethereum token holders can now participate in network governance to a greater effect, thanks to PoS. Stakeholders vote on changes through the blockchain and the new updates are implemented based on the majority vote.
The ETH token supply will decrease from 4.3% inflation to 0.43% annually. This is a great benefit to the ETH price long term as it washes out around $7.5 billion in sell pressure each year, all while incentivizing users to hold/stake tokens.
PoS has allowed more protocols and layer 2s to adapt to the network, giving Ethereum access to better scaling solutions, tools, and dApps that can improve the network environment in a variety of ways.
Users who staked Ethereum will not be able to redeem their ETH until 6-12 months after the Merge completion, based on their lock period.
Rising costs of electricity globally have been a troubling topic set to impact parts of the world more severely in the coming months. Before the Merge, the mass amount of transactions occurring on the network meant that miners had to expend significantly more computation power to verify transactions, leading to high energy consumption. Ethereum – in moving to PoS – has reduced its energy usage by over 99%. This has also reduced global energy consumption by an incredible 0.2%.
PoW Ethereum had a network speed of 15 transactions per second. Now, with the help of sharding (which is breaking up data from the main network and spreading it across multiple sidechains and rollups), Ethereum will be able to process from 20,000 to 100,000 transactions per second once all upgrades are functioning on the network. The creation and settlement of blocks will also happen in record time.
Blocks or falsified data cannot be added to the Ethereum blockchain as the PoS consensus mechanism would require hackers to own at least 51% of all ETH tokens in order to manipulate the network; impossible.
Post-merge Ethereum became a sell-off event – as was demonstrated in the derivatives data in the previous month – dropping the Ethereum price by 17% over a 4-day span. The current Ethereum price is still declining due to macro factors and is currently sitting at around $1,250 USD.
About The Ethereum Gas Fees
[ Gas fees are the transaction cost for using a network.]
In reality, the infamous ETH gas fees have not been high since July this year, partially due to the deployment of multiple scaling solutions / rollups launched or scaled over the past 6-9 months.
Still, network congestion may still occur on Ethereum until all scaling solutions are fully functional with the main net. Layer 2 solutions, shard chains, and rollups are emerging technologies that require their fair share of trial and error. Until then, here are two solutions that can help you avoid high gas fees in case of Ethereum main net congestion:
It is possible to simulate a transaction in order to check how much gas fees will be on any given amount of funds or across a particular network. Tenderly and DeFi Saver are two tools you may utilize to run a gas fee simulation.
There are also dApps that reduce the cost of gas fees through bundled transactions. They’re quite easy to find, however there are some such as Tornado Cash or Monero that are sanctioned or illegal in certain countries, so check the domestic law before use.
Overall, Ethereum has changed to a more robust network with the move to PoS, all while simultaneously increasing security, efficient transaction speed, decreasing energy consumption, and dramatically slowing ETH inflation. Ethereum has set itself up for the long term.