The Merge And ETH: Ethereum's Technological Revolution

Ethereum reached a historic milestone by completing The Merge in 2022 — the event that transitioned the network from a Proof of Work to a Proof of Stake consensus mechanism. This is not merely a technical upgrade but a decisive turning point for the future of ETH and the entire blockchain ecosystem.

Why Does Ethereum Need to Change Its Consensus Mechanism?

Since its launch in 2015, Ethereum has established itself as the leading decentralized computing platform. However, with its initial PoW architecture, the network faced fundamental limitations: slow processing speeds, high transaction fees, and enormous energy consumption.

The core issue, called the “scalability trilemma” by blockchain scientists, is the challenge of balancing three factors: scalability, security, and decentralization. PoW blockchains are often difficult to scale because the number of transactions per block is limited, and blocks must be produced at a fixed rate. This can easily lead to network congestion when transaction demand increases.

To address these limitations, Ethereum needs to switch to a more efficient mechanism — and that is the reason behind The Merge.

The Merge: Connecting Two Network Layers into One

The Merge is the moment when the Beacon Chain — launched in December 2020 — officially merged with the execution layer of the Ethereum mainnet. The Beacon Chain is where Proof of Stake was first implemented within the ecosystem.

This merger means Ethereum no longer relies on miners to validate blocks. Instead, validators — those who stake ETH — will take on this role. Validators are selected randomly and periodically to attest to candidate blocks, earning staking rewards and transaction fees in return.

The Impact of The Merge on ETH: Reduced Issuance, Increased Value

The Merge brings a fundamental change to the economic model of ETH. Previously, the PoW system distributed about 13,000 ETH daily through mining and staking rewards. After The Merge, this number drops to around 1,600 ETH per day — a reduction of approximately 90%.

Reducing supply can create upward price pressure, especially if demand for ETH remains steady or increases. However, financial markets are always full of uncertainties, and ETH’s price is influenced by many other variables beyond supply factors.

Ethereum’s Comprehensive Upgrade Roadmap

The Merge is just the first step in a series of major improvements collectively called Ethereum 2.0. After The Merge, Ethereum will continue to receive important upgrades:

Beacon Chain: The PoS Foundation

Launched in 2020, the Beacon Chain has been running parallel to the mainnet to test Proof of Stake. It is an essential preparatory step before The Merge. Users can interact with the Beacon Chain in two ways: participate in staking ETH or run client software to help secure the network.

Sharding: Sharing Data to Scale

Sharding will enable Ethereum to process more transactions in parallel by dividing the blockchain data into multiple parts (shards). Each shard functions as a mini-blockchain containing a portion of the total network data. This approach allows network nodes to verify transactions more efficiently.

Sharding is planned to be deployed in multiple phases. Version 1 will provide additional data to the network, while version 2 will support data storage and execution of code. This is one of the most promising scalability solutions for Ethereum.

Future Upgrades: The Surge, The Verge, The Purge, The Splurge

Beyond Sharding, Ethereum has other upgrades planned in the long term, although specific timelines are not yet defined. These upgrades aim to further optimize performance, security, and decentralization.

Why Are Multiple Scalability Solutions Necessary?

Ethereum does not rely on a single solution to scale but develops a multi-layered strategy. The reason is simple: a future where Ethereum is widely adopted requires the ability to handle enormous transaction volumes. Having multiple solutions simultaneously not only increases the network’s total throughput but also provides redundancy — if one solution encounters issues, others can continue to operate.

Specific Changes After The Merge

Consensus Mechanism: From Mining to Validation

Instead of miners competing to add the next block, PoS uses randomly selected validators. This model consumes significantly less energy — approximately 99.95% less than PoW — making Ethereum a more sustainable and environmentally friendly network.

Transaction History Preserved

All Ethereum transaction history is merged with the Beacon Chain, ensuring continuity. Importantly: ETH remains ETH, with no conversion or replacement. Users do not need to take any action to prepare — their ETH remains safe and accessible after The Merge.

Increased Staking Rewards

Validators will earn rewards from transaction fees and MEV (Maximum Extractable Value). This is expected to significantly increase the annual percentage rate (APR) for staking ETH.

Ethereum’s Long-Term Vision

The Merge is not the end but the beginning of a long journey. As all upgrades are implemented, Ethereum aims to become a highly scalable network with minimal energy consumption, while maintaining decentralization and security — the three elements of the “scalability trilemma” that other blockchains have yet to fully solve.

The Merge marks a pivotal milestone in Ethereum’s history, transitioning from a computational power-based blockchain to a sustainable and efficient one. It is the clearest evidence that Ethereum is not just a technical project but a vibrant platform continuously evolving to meet current and future challenges. ETH and the Ethereum ecosystem will continue to be shaped by upcoming upgrades, moving toward a truly decentralized future.

Risk Warning: The value of digital assets is highly affected by market risks and price volatility. Your investment value can decrease or increase. You are fully responsible for your investment decisions. Past performance is not a reliable indicator of future results. Only invest in products you understand and accept the risks.