The Merge #1 w/ Anthony Sassano & Tim Beiko
Making sense of The Merge and clarifying common misconceptions
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Read time: ~6 minutes
The Merge is an 8-part series run by the ssv network, to teach people everything they need to know about one of the biggest upcoming events for the Ethereum blockchain. This piece is a summary of Part #1, in which Anthony Sassano speaks to Tim Beiko.
Tim is known for facilitating and publicly sharing the outputs of the All Core Dev Standups with the Ethereum developers, which gives him great insight into what’s going on with Ethereum.
We’ll cover:
what is the Merge?
a brief history of the Merge
common misconceptions about the Merge
what’s coming after the Merge?
1/ What is the Merge?
The Merge will change the consensus mechanism of the Ethereum blockchain from proof-of-work to proof-of-stake. To break that down:
consensus mechanism - how blockchains agree on the network's current state, like deciding what transactions should be there, and in what order. It's designed to secure the network and prevent "51% attacks", where an attacker controls the majority of the network
proof-of-work - virtual miners race to solve complex math puzzles through a process of trial and error, to validate blocks of transactions. This is energy-intensive as it requires a lot of computing power. Attackers would need over 51% of the power being used in the network to take control, which is hard/expensive to do
proof-of-stake - staking is the process of locking up crypto assets. Users can stake their crypto assets to become a validator, which lets them create new blocks of transactions and verify proposed blocks. Attackers would need over 51% of the total staked assets to control the network. While possible, it's a lot of money and if it happened, the value of the asset would probably drop a lot, which wouldn’t be great for the attacker
The reason it’s called The Merge, is because it requires the joining of the execution layer of Ethereum, with the proof-of-stake consensus layer. Again, let’s break that down:
execution layer (a.k.a Mainnet) - the main Ethereum network which is being used today, where real transactions happen. This is currently secured by a proof-of-work consensus mechanism
consensus layer (a.k.a Beacon Chain) - a separate chain with no end user transactions, which runs the proof-of-stake algorithm. It was created in 2020 because it was too risky to switch Mainnet to proof-of-stake overnight given there was quite a lot of activity on Ethereum
Tim sums it up nicely:
Tim Beiko: The idea with The Merge is to basically say that now that the proof-of-stake chain has been battle-tested - it has been live for some time, there’s tens of billions of dollars in it, we know it works - we’re ready to use it as the main consensus engine for Ethereum. This is why we call it the Merge, we literally merge both chains together so that after that there’s just a single Ethereum chain which has everybody’s transactions and all the smart contracts, but instead of using proof-of-work to come to consensus, it uses proof-of-stake. (source: The Merge hosted by Anthony Sassano w/ special guest Tim Beiko)
2/ A brief history
Given the amount of activity & value stored on Ethereum, The Merge has required extensive testing since the launch of the Beacon Chain in December 2020:
In May 2021, testing focused on proving the feasibility of having a separate consensus & execution layer. After that, testing made sure that The Merge wouldn’t break any smart contracts or applications
Since March 2022, there have been no major changes to the spec of The Merge. The focus shifted to client implementation. Essentially, different teams implement the Ethereum protocol in the form of software. After The Merge, two pieces of software will be needed, one for consensus and another for execution. The hard part of the Merge has been making sure that every possible combo of consensus & execution layer clients work together
Now, after many rounds of testing, there are only a small number of client combinations having issues. This means there are only two key milestones before the Mainnet Merge:
A successful test-run on the Sepolia testnet
A successful, final test-run on the Goerli testnet
3/ Common misconceptions
Anthony and Tim clarified 3 key misconceptions that people often have about the Merge:
Misconception #1) The Merge will lower gas fees
Gas fees are transaction fees that users pay to transact on blockchains; also referred to as paying for blockspace. This means gas fees will fall if there’s:
less demand for blockspace (i.e. less activity); or
more supply of blockspace (i.e. an increase in the number of blocks and/or size of the blocks)
However, The Merge is just changing how the Ethereum network determines the next valid block. It’s not changing the supply of blockspace, which means it doesn’t lower gas fees.
Misconception #2) The Merge will unlocked all staked ETH on the Beacon Chain
For context, while no end user transactions are being run on the Beacon Chain, real ETH is currently being staked. Staking is important because once The Merge happens, the more ETH that’s staked, the more secure the Ethereum network will be.
However, users won’t be able to withdraw this staked ETH immediately after the Merge. Given the complexity of The Merge and the desire to reduce risks, the ability to withdraw was removed from the scope of The Merge. Instead, it’ll be enabled with an upgrade later on, probably 6-12 months after The Merge.
Misconception #3) Users need 32 ETH to run a node post-Merge
In short, after the Merge, users need 32 ETH to become a validator, but they don’t need 32 ETH to run a normal node.
The terminology is confusing, so let me explain:
a validator has the opportunity to propose new blocks of transactions and vote on the validity of blocks proposed by other validators. Validators need to deposit and stake 32 ETH, and if they do wrong things or go offline, they’re penalised on that staked amount
a normal node can’t propose new blocks, but it still validates that every single block proposed by validators has valid transactions. There’s no 32 ETH requirement to run a normal node. This is by design because it means that there’ll be more normal nodes than validators, so that even if validators collude to create an invalid block, they’ll get caught
4/ What’s coming after the Merge?
The first Ethereum upgrade post-merge is called Shanghai. While the specifications for the upgrade are still being finalised, here’s a peek into 3 things that Tim is excited about:
enabling Beacon Chain withdrawals for those staking their ETH
creating a path to scalability and lower costs by reducing the cost of storing data on Ethereum
making it easier to upgrade the Ethereum Virtual Machine (EVM) without breaking every smart contract on Ethereum