"It is predicted that the merger will occur around September 15, but the exact date depends on the hash rate." On August 12, Ethereum co-founder Vitalik Buterin announced a relatively clear date for the network merger on Twitter. This means that the much-anticipated event in the blockchain world-the merger of Ethereum will come in a month.

"The Marge" is the most significant upgrade in the history of the blockchain network Ethereum. In this upgrade, the current Ethereum mainnet (the existing execution layer) will be combined with the Proof of Stake (PoS) consensus layer "Beacon Chain". This marks that Ethereum will end the current proof-of-work (PoW) consensus to eliminate the need for energy-intensive mining, and instead use the method of pledging ETH to protect the operation of the network.

The merger of Ethereum will not only reduce the energy consumption of the network by about 99.95%, but also lay the foundation for its subsequent expansion plan upgrades such as sharding.

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Myth 1: “It takes 32 ETH to stake to run a node”

There are two types of Ethereum nodes: block producers and non-block producers.

There are two types of Ethereum nodes: block producers and non-block producers.

Other than a consumer-grade computer with 1-2 TB of storage available and an internet connection, the other nodes on the network (i.e. most nodes) don't need to contribute any economic resources. These nodes do not produce blocks, but they still play a key role in protecting the network—monitoring new blocks and verifying the validity of new blocks according to network consensus rules, and supervising all block producers to take responsibility. If the block is valid, these nodes are responsible for broadcasting the valid information to the network. If the block is invalid for any reason, the node software will ignore it and stop broadcasting.

Other than a consumer-grade computer with 1-2 TB of storage available and an internet connection, the other nodes on the network (i.e. most nodes) don't need to contribute any economic resources. These nodes do not produce blocks, but they still play a key role in protecting the network—monitoring new blocks and verifying the validity of new blocks according to network consensus rules, and supervising all block producers to take responsibility. If the block is valid, these nodes are responsible for broadcasting the valid information to the network. If the block is invalid for any reason, the node software will ignore it and stop broadcasting.

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Misconception 2: "The merger will reduce the gas fee"

Positive answer: Merge is a change in the consensus mechanism, not an expansion of network capacity, and will not reduce Gas costs.

Gas fees are a product of network demand relative to network capacity. The merged Ethereum no longer uses the PoW consensus, and the transition to the PoS consensus will not significantly change any parameters that directly affect network capacity or throughput.

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Myth 3: “A merger will significantly speed up transactions”

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The "speed" of a transaction can be measured in several ways, including the time it takes for a transaction to be included in a block and the time it takes for it to be confirmed. These two changes have changed slightly after the merge, but not in a way that users will notice.

In terms of block generation speed, historically, under the PoW mechanism, a new block is generated approximately every 13.3 seconds. On the beacon chain, slots (12-second time slots) appear exactly every 12 seconds, and each slot is an opportunity for the verifier to produce a block. Blocks are produced in most slots, but not necessarily all (i.e. validators are offline). The block generation frequency under the PoS mechanism will be about 10% higher than that of PoW. "It's a fairly insignificant change that users are unlikely to notice."

When it comes to confirming transactions, PoS consensus introduces a concept of transaction finality that did not exist before. Under PoW consensus, the ability to reverse blocks increases exponentially with each block mined to confirm transactions, but it never quite reaches zero. Under the PoS consensus, the confirmed block is bundled into the verifier's epoch (voting period, 6.4 minutes time span, including 32 opportunities for block generation or 32 slots). When an epoch ends, validators vote to decide whether they think the epoch is "fair". If the validator agrees to justify the epoch, it will complete the confirmation in the next epoch. Reversing a finalized transaction is not economically feasible as it would require acquiring and burning more than 1/3 of the staked ETH.

Under the PoW consensus, the operation of many Dapps requires a large number of blocks to confirm transactions, and the time it takes for these confirmations is equivalent to the final confirmation time under the PoS consensus. Therefore, confirmation work can provide additional security guarantees, but will not significantly speed up transactions.

Misconception 4: “Staked ETH can be withdrawn as soon as the merge is complete”

Positive solution: This merger upgrade has not yet enabled the withdrawal of pledged ETH, and the "Shanghai upgrade" of Ethereum will enable withdrawals.

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Misconception 5: "Before the Shanghai upgrade, validators could not obtain liquid ETH rewards"

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What needs to be known is that the ETH issued by the consensus layer is a reward for validators who contribute to the consensus, and the beacon chain represents the newly issued ETH. Validators have a unique address to save their pledged ETH and pledge rewards, and this part of ETH will be locked until the "Shanghai upgrade".

The ETH on the execution layer (the current Ethereum mainnet) is calculated separately from the consensus layer. When a user executes a transaction on the Ethereum mainnet, gas fees must be paid in ETH, including tips for validators. This ETH is already in the execution layer and is not newly issued by the beacon chain protocol, so it can be provided to the verifier immediately (note that the verifier must provide the correct address to the Fee Recipient client software).

Myth 6: “Stakers can withdraw immediately after withdrawals are enabled”

Positive solution: For security reasons, the rate at which validators exit will be limited.

One important caveat here - full validator exits are rate limited by the protocol, only 6 validators can exit per epoch (i.e. 6.4 minutes to exit, so 1350 validators per day can exit, or Say, with a pledge of more than 10 million ETH, only about 43,200 ETH can be withdrawn every day).

One important caveat here - full validator exits are rate limited by the protocol, only 6 validators can exit per epoch (i.e. 6.4 minutes to exit, so 1350 validators per day can exit, or Say, with a pledge of more than 10 million ETH, only about 43,200 ETH can be withdrawn every day).

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It can be seen that Ethereum deliberately sets APR as a dynamic adjustment mode, which allows stakeholders to decide how much they are willing to pay to protect the network according to the market. With withdrawals enabled, if the rate is too low, validators will exit at the protocol-limited rate, which will result in an increase in the APR of all remaining validators, at which point new stakers will be attracted, or exited stakers will return.

Myth 7: “Staking APR is expected to triple after the merger”

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The APR of the stakers will indeed increase after the merger, but to understand the specific increase by how much, it is necessary to understand where the APR increase comes from.

The growth does not come from an increase in ETH issuance. On the contrary, after the merger of Ethereum, ETH issuance will decrease by about 90%. The growth actually comes from a redistribution of network transaction fees, which will start going to validators instead of miners in the past.

Network fees are a separate source of income when validators produce blocks. As you can imagine, the amount of fees received by validators is proportional to the activity of the network at the time of their block creation. The more fees paid by users active on the network, the more fees validators receive.

Judging by recent activity on the Ethereum blockchain, approximately 10% of all gas fees paid are currently paid to miners in tips, with the rest being burned. Forecast figures are much higher than this percentage and were calculated when network usage was at an all-time high. Extrapolating the 10% figure to an average of recent network activity, the projected APR for staking increases to ~7%, ~50% higher than the base issuance APR (as of June 2022).

Myth 8: "The merger will cause Ethereum network downtime"

Like changing the engines of a rocket ship mid-flight, Ethereum merges are designed to be performed without pausing any operations during the switchover. Mergers will be triggered by Terminal Total Difficulty (TTD), which is a cumulative measure of the total hashrate building the chain. When the time comes and this criterion is met, blocks will transition from a block built using PoW consensus to a block built with PoS consensus.

Ethereum developers have put in a lot of work to ensure that the transition to PoS consensus does not disrupt the network or harm users.

Like changing the engines of a rocket ship mid-flight, Ethereum merges are designed to be performed without pausing any operations during the switchover. Mergers will be triggered by Terminal Total Difficulty (TTD), which is a cumulative measure of the total hashrate building the chain. When the time comes and this criterion is met, blocks will transition from a block built using PoW consensus to a block built with PoS consensus.

On August 12, Vitalik Buterin, the co-founder of Ethereum, tweeted that the total terminal difficulty of the network has been set to 58750000000000000000000. This means that the Ethereum PoW network now has a roughly fixed amount of hashes available for miners to mine. After the total difficulty of the terminal triggers the merger, the miners under the PoW system will withdraw from the stage of Ethereum, and the verifiers under the PoS system will take over the block production work of the network.