Résumé
The Ethereum mainnet will soon move from a proof-of-work consensus mechanism to proof-of-stake in an upgrade called The Merge. The Merge is part of a series of major upgrades to the Ethereum ecosystem, which also includes The Surge, The Verge, The Purge, and The Splurge. The goal of these upgrades is to make Ethereum more scalable and more energy efficient. The Merge will combine the Ethereum mainnet with the proof-of-stake Beacon Chain and is expected to take place in September 2022.
Introduction
Since its launch in 2015, Ethereum has established its place in the blockchain industry as a popular decentralized computing platform, which has allowed it to create thousands of projects on its blockchain. Although it remains one of the largest blockchains, Ethereum's current infrastructure cannot scale its operations in a way that can meet growing global demand. In order to combat the lack of scalability, the Ethereum team proposed a set of upgrades that would allow Ethereum to scale. These upgrades are Beacon Chain, The Merge, The Surge, The Verge, The Purge, and The Splurge.
Why upgrade Ethereum?
Blockchains are generally designed with a fundamental principle of decentralization instead of relying on a central authority. The benefits of decentralized blockchains include being permissionless, trustless, and more secure by being resilient to single points of failure.
As blockchains become more popular, platforms must ensure they can meet the global need for transaction processing capacity, also known as scalability demands. If they fail to do so, the network will become congested as the blockchain becomes overwhelmed with pending transactions. This often results in higher transaction fees.
However, security and scalability can be complicated if blockchains want to preserve their decentralized nature. This problem is explained by the concept of the scalability trilemma presented by Vitalik Buterin. The Blockchain Trilemma describes the challenge of balancing three important properties: scalability, security, and decentralization.
As Vitalik Buterin acknowledged, the Ethereum network before The Merge cannot meet the scalability criteria due to its proof-of-work consensus mechanism. A proof-of-work blockchain tends to be more difficult to scale for several reasons. First, the number of transactions a block can contain is limited. Then the blocks must be mined at a constant rate.
For example, Bitcoin is designed so that blocks are mined every 10 minutes on average, thanks to the mining difficulty being automatically adjusted by the protocol. Although the design of Bitcoin makes it highly secure, the block time associated with the per-block transaction limit can lead to network congestion during times of increased demand. This often results in significantly increased transaction fees and confirmation times.
To overcome these PoW-related limitations, the Ethereum team proposed a set of upgrades known as Ethereum 2.0 (ETH 2.0).
Ethereum updates: the overview
Ethereum 2.0 upgrades include the existing Beacon chain (already deployed), The Merge (soon to be deployed), as well as The Surge, The Verge, The Purge, and The Splurge. Once all upgrades are rolled out, the new Ethereum blockchain is expected to become more scalable, secure and sustainable, while remaining decentralized.
La Beacon Chain
Previously known as Phase 0, the Beacon Chain marks the first upgrade in Ethereum's series of major upgrades. It was launched on December 1, 2020 and introduced proof of stake to the Ethereum ecosystem. Users can interact with the Beacon Chain in two ways: by staking ETH or by running a client to secure the network. It currently runs alongside the Ethereum mainnet.
The Merge
The Merge is Ethereum's next big step in solving scalability issues. Simply put, it integrates the two existing independent chains in the Ethereum ecosystem: the execution layer and the consensus layer (Beacon Chain).
The Ethereum mainnet is expected to merge into the proof-of-stake system coordinated by the Beacon Chain in September 2022. After The Merge, the ecosystem will only use a proof-of-stake mechanism to secure its network.
Consensus mechanism
Once The Merge is implemented, proof of work will be replaced by a proof of stake consensus mechanism. Instead of being mined, blocks will be issued (or forged) by nodes called validators. A node is randomly selected periodically to validate a candidate block. These validators are incentivized to do so with transaction fee rewards and staking rewards. Since no node competes to add a new block, PoS requires significantly fewer resources than PoW, making it more sustainable.
Transactions mainnet
Currently, the Beacon Chain only processes a portion of network transactions. With The Merge, it will be the key place of consensus.
“After The Merge, the Beacon Chain will be the consensus engine for all network data, including execution layer transactions and account balances. » – Ethereum.org
Tokens
Ethereum's transaction history will be merged with the Beacon Chain, but its currency Ether (ETH) will remain the same. ETH funds remain accessible after The Merge, and ETH token users will not need to take any steps toward upgrading.
The current model has a token issuance system that distributes approximately 13,000 ETH per day in mining and staking rewards. After the implementation of The Merge, there will be no more mining rewards, reducing ETH issuance to approximately 1,600 ETH per day.
And after The Merge?
Although there is no official announcement on the other Ethereum enhancements, namely The Surge, The Verge, The Purge and The Splurge, sharding is planned to be implemented in 2023 after The Merge.
Sharding
Ethereum will increase its scalability using sharding to increase its throughput, which will likely reduce transaction costs and time. Sharding introduces shard chains, which are similar to regular blockchains, except that they only contain a portion of the blockchain's data. Thanks to the specific subset of data provided by shard chains, nodes can verify transactions more efficiently.
Sharding is a scalability solution that requires a lot of time and effort to implement. However, this could be one of blockchain's biggest wins in terms of scalability if done right, allowing Ethereum to better store and access data.
The sharding process will take place in several phases, with version 1 shard chains providing more data to the network and version 2 shard chains storing and executing the code. Communication between the two versions will be possible.
As for other improvements, nothing is set in stone yet. In a tweet, Vitalik Buterin made it clear that the above upgrades should not be considered steps, as they are parallel upgrades to The Merge. We invite our readers to stay subscribed to the Binance Blog and Binance Academy to get more information about The Merge and upcoming Ethereum upgrades.
Why are there so many scalability solutions?
It appears that Ethereum is preparing for the future and absorbing a massive transaction load that will follow mass adoption. The more solutions there are, the more overall network congestion can be reduced. Additionally, it can also avoid single points of failure if a scalability solution proves insufficient. Having multiple scalability solutions not only prepares the network for increased transaction speed and throughput, but also helps users avoid high transaction fees.
The impact of The Merge on ETH
As one of the most prominent second-generation blockchain projects, Ethereum launched with an initial supply of 72 million ether (ETH). In its original PoW model, a large percentage of this token supply is used to incentivize miners to secure the network.
When moving to PoS, mining rewards will no longer be granted. Therefore, there will be a net reduction in annual ETH issuance of approximately 90%. If the law of supply and demand works, this could eventually lead to a rise in the price of ETH. However, financial markets are unpredictable and volatile, and many other factors are at play.
The impact of The Merge on BETH
BETH is a tokenized version of Ether staked on Binance. Following The Merge, miners will no longer be able to earn proof of work rewards. Instead, validators will be rewarded with staking rewards as well as transaction fees that were offered to miners before The Merge. Additionally, validators will receive a portion of Maximum Extractable Value (MEV) rewards after the merge, and the APR is expected to increase when BETH adopts this concept. Therefore, the annual percentage rate (APR) is expected to increase significantly.
The impact of The Merge on Binance users and products
For ETH token holders and Binance users, Binance products will be mostly unaffected. Only our ETH mining service will be removed, and ETH borrowing, deposits and withdrawals will be suspended for a short time.
If you are an ETH holder, you can read the What will happen to my Ethereum after The Merge blog to prepare for The Merge.
To conclude
The Merge is the second significant update to the Ethereum network in a series. It was proposed to prepare the implementation of new scalability solutions. After completing all planned upgrades, Ethereum will likely be ready to support more transaction loads without compromising its security or decentralization.
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