After years of delay, Ethereum will finally switch to the proof-of-stake (PoS) consensus mechanism this month. The transition, nicknamed The Merge, is one of the most anticipated events in the cryptosphere. So much so that the price of ETH spiked when the approximate date (September 15) for the transition was announced.
However, with all the talk and hype around the event, several half-truths and misconceptions have begun to emerge, causing people to have inflated expectations of the transition. Tag along as we delve into three of these common myths and debunk them so that you have more realistic expectations of The Merge.
The first misconception is that the transaction cost (gas fees) on the Ethereum network will wither significantly. Sure, switching to the PoS model will reduce the network's energy consumption by as much as 99 percent, but it will not affect gas fees.
Gas fees of a blockchain are a product of the network's demand and processing capacity. However, Ethereum is not slated to see significant improvement in processing power through The Merge. This fact is clearly highlighted in one of Ethereum's blog posts. "The Merge is a change of consensus mechanism, not an expansion of network capacity, and will not result in lower gas fees," reads the post.
The second misconception is that transactions on the Ethereum blockchain will become much faster after the Merge, which is again not true. The PoW Beacon Chain of the Ethereum network was designed to add a new block to the blockchain every 13.3 seconds. When it adopts the PoS model, the addition of new blocks will take 10 percent less time.
However, Ethereum developers do not consider this to be as significant a development as many believe it to be. "On proof-of-stake, blocks will be produced 10 percent more frequently than on proof-of-work. This is a fairly insignificant change and is unlikely to be noticed by users," the Ethereum blog reads.
Ethereum developers maintain that the blockchain's decentralised apps (DApps) will determine the blockchain's transaction speed. Therefore, the upgraded blockchain itself will not be a conduit for improved speeds, not yet at least.
Lastly, many users believe that, after the Merge, their staked ETH will become unlocked. However, this is again not true. When the Ethereum blockchain becomes a functional PoS chain, the ETH stakers will become the custodians of the network's security instead of the miners. However, unstaking will become possible only after the Shanghai upgrade, which will follow the Merge.
This will result in all the staked ETH being locked with the network for an estimated six to 12 months. The rewards earned through the same and newly-issued ETH will also remain locked alongside this staked ETH.
Conclusion
The Merge strives to add scalability, sustainability and security to the Ethereum blockchain. However, it will not optimise transaction time and gas fees. Fortunately, users should see upgrades in both these departments once sharding capabilities are introduced to Ethereum somewhere in 2023.
This update will allow the network to process transactions quickly and cost-effectively by splitting the blockchain into smaller, more manageable parts.
Therefore, while The Merge is a significant event, it is more of a stepping stone to several other updates. The real benefits of the switch to proof-of-stake will only come into the picture a year or two from now.
