In September 2022, the Ethereum core network will merge with Beacon Chain and a number of chains that use sharding as a result of the merger. This move will mark Ethereum’s abandonment of the Proof-of-Work (PoW) model and a final transition to the Proof-of-Stake (PoS) model.
Imagine that Ethereum is a race car and the Beacon Chain is a new, more fuel-efficient engine that will replace the old one as the race progresses. Everything else in the car would remain the same, but with one significant change in engine performance.
Disclaimer: The information in this article is subject to change as more information about the merger becomes available.
How do I prepare for the merger?
To answer briefly, users of Cryptoexchange will not need to do anything: the merger will not affect Ethereum holders’ funds. All Ethereum coins will be transferred to the new network during the merger, and Ethereum will still appear as ETH in users’ wallets. However, the crypto-exchanges will temporarily suspend Ethereum deposits and withdrawals until the merger is completed.
Users of crypto exchanges should be wary of scammers offering to purchase “ETH2” tokens or transfer funds to a random wallet address to “complete the upgrade.” no companies will ever ask users to send funds in this way.
How will the merger affect cryptocurrency exchange products and services?
The merger will not affect most services but ETH will be excluded from mining services and ETH loans, deposits and withdrawals may be temporarily stopped.
In case of a fork.
Note that if Ethereum splits into two different networks — such a process is called a fork — the “ETH” ticker will belong to the new Ethereum chain on PoS. The token resulting from the fork will have to go through the standard rigorous listing process that is mandatory for every token on cryptocurrency exchanges
The fork may or may not happen. According to the Ethereum team, any hardfork during the merger will be considered unofficial. If an “unofficial” fork occurs, watch for the publication of details about the allocation of tokens on the exchange or on the wallet where they are stored with you.
Forking, Gas Fees, and Stacking
Below you will find a summary of how the merger will affect transaction speeds, gas fees, and staking for Ethereum holders.
1. Transaction speeds.
Ethereum holders can expect their usual transaction speeds after the merger. Minor changes will be imperceptible to the average user.
2. Gas fees
Gas fees in Ethereum will remain the same for now. In theory, the Ethereum update sets the stage for sharding, opening up possibilities for cheaper gas fees in the future.
It will no longer be the miners who secure the network, but the users who add Ethereum to the stacking. Note that stackers will not be able to withdraw ETH contributed to stacking for six to twelve months after the merger.
However, once Ethereum implements the Shanghai update, the network will allow up to 40,000 ETH per day to be withdrawn from stacking.
The merger is one of the most important milestones for the Ethereum network and the entire Web3 ecosystem.