Acting as a flagship in the cryptocurrency ecosystem, in terms of technology and community, Ethereum is on the verge of a major transformation. In 2013, Vitalik Buterin published the whitepaper conceptualizing Ethereum – “Next Generation Smart Contract and Decentralized Application Platform”. Ethereum uses Proof of Work as its consensus mechanism and has been in existence since 2015 as a mined crypto-asset. By 2022, final steps are being taken to change the Ethereum consensus mechanism. As the transition to Ethereum 2.0 is about to be completed, we are going into the details of this big milestone called "The Merge".
Ethereum and Proof of Work
Ranking second in terms of market value, Ethereum has also played a role in shaping many projects in the ecosystem thanks to its technology. Now, with Ethereum 2.0, the ecosystem is undergoing a transformation. Ethereum plans to migrate from its current version 1.0 to the new version 2.0 as of September.
Bitcoin, which launched its decentralized crypto asset ecosystem in 2009, uses Proof of Work as its consensus mechanism. As of today, Proof of Work is a highly controversial consensus mechanism due to its high energy consumption. The amount of energy used by mining is one of the main problems of the ecosystem. The team behind Ethereum technology wanted from the very beginning to migrate it to Ethereum's energy-friendly Proof of Stake - PoS consensus mechanism. Released by Ethereum Co-Founder Vitalik Buterin; The "Slasher" and "consensus by bet" studies included ideas for how the Ethereum network could migrate to PoS while the network was still running. The community settled on the solution included in the “Casper the Friendly Finality Gadget” study created by Vitalik Buterin and Virgil Griffith in 2017.
What is Casper FFG?
Casper the Friendly Finality Gadget (FFG) is a Proof of Stake algorithm. Thanks to FFG, it is aimed to prevent problems such as chain stops and censorship and malicious actions that may occur in the PoS mechanism.
The Beacon Chain
Working in parallel with the Main Ethereum network with PoW mechanism as consensus, The Beacon Chain is a network with a PoS consensus layer. The purpose of the network is to change the consensus layer of the Ethereum network while changing the consensus mechanism, ensuring that the network never stops. If we need to go through an example here, we can give the example of changing the engine of the vehicle with an electric motor without stopping and damaging the vehicle while driving on the highway with a gasoline vehicle. Like the fossil fuel engine types in the example, PoW is much more damaging to the environment than its electric counterparts. The Beacon Chain, which started operating in 2020, allowed Ethereum holders to become validators on the network by locking their assets.
With the combination of The Beacon Chain and the Main Ethereum network, which has been active for 2 years, all data in the Ethereum 1.0 network will be migrated to Ethereum 2.0, and the definitive transition from the Proof of Work mechanism to the Proof of Stake mechanism for Ethereum will be completed.
The Merge
The Ethereum 2.0 transition with The Merge transaction is not limited to changing the consensus mechanism of the network. At the same time, Shards technology, which is the 2nd stage after the launch of The Beacon Chain, was introduced into the network. By using the "Sharding" operation on the Ethereum network, very large databases will be divided into smaller and more manageable partitions. Thus, the scalability problem on the network will be solved.
With The Merge, Ethereum will cease to be a crypto-mined crypto-asset and will replace miners on the network with validators. Those who want to be validators on the Ethereum network will lock 32 ETH and face various penalties if they confirm transactions incorrectly; these penalties can go up to confiscation of all locked funds.
When Will It Happen?
The Ethereum team is nearing the end of its long-term precision work “The Merge”. In addition, Ropsten ver Sepolia trials were completed without any problems in the network where various "Shadow Forks" were carried out until this stage. Finally, on August 11, 2022, The Merge transaction was successfully completed on the Goerli Testnet. With this development, it is estimated that there will be no delay in the major transition of the mainnet and The Merge transaction will take place on September 15 - 16 as scheduled.
True and False Known About The Merge
False - Scaling issues will be resolved with Ethereum PoS.
True - with the Proof of Stake consensus mechanism, Ethereum will be one step closer to the perfect blockchain, which it has long sought to reach. However, there will be no change in Ethereum scaling issues with The Merge. Transactions will not be cheaper or faster. (Changes will continue to occur depending on the density of the network.)
False - I have an Ethereum asset on Bitexen, I need to perform an update.
True - If you are not running or mining nodes on the Ethereum network, you do not need to take any action. Those running or mining nodes should update their devices and versions.
