According to the latest data from the Ethereum official website, the total pledge volume of the Ethereum Beacon Chain network recently exceeded the 10 million ETH milestone. The crypto community believes that the Ethereum 2.0 beacon chain will complete its integration with the Ethereum 1.0 network this year, known as “The Merge”. However, for the Ethereum community, will “The Merge” really solve many of the problems on the current network? Let us do further analysis in this article.
We know that the Ethereum Foundation has phased out the terms “Eth1” and “Eth2” in favor of “execution layer” and “consensus layer” respectively. When the consensus layer is ready to replace the current mining system, the two layers will merge into normal Ethereum. So what is the way forward after the Ethereum merger? In a recent interview, the Ethereum co-founder explained some of the terms mentioned in the Ethereum blueprint.
The current problems encountered by the Ethereum network
The reason for the urgent upgrade of Ethereum is mainly due to the many problems existing in the current runtime, which seriously hinder the progress of the Ethereum blockchain. A few key issues with Ethereum are listed below:
- High gas fees: “gas” is the fee paid to miners who provide computing power to the network. The gas cost is based on the resource demand of the Ethereum network, and its market price is variable. The higher the demand, the higher the gas cost. The higher the gas fee someone is willing to pay, the faster the transaction will execute. This means that when an application on Ethereum surges in popularity, gas prices can be prohibitively high, and sometimes the cost of executing a transaction is even higher than the price of the transaction token. For example, at some point, the gas cost of purchasing a low-cost NFT may be higher than the value of the NFT itself.
- It consumes a lot of electricity: At present, to establish consensus on the Ethereum blockchain, nodes on the Ethereum network must perform complex calculations and give answers, which is called “Proof of Work”. The greater the usage of Ethereum, the greater the computational effort required to validate its blockchain, which will cost nodes on the network more electricity. This has also led to criticism of the Ethereum network – the operation of the Ethereum network will bring pollution and destroy our natural environment.
- Disk space issues: As the size of the Ethereum network continues to expand, it becomes more and more difficult to run nodes. This is due to the increasing amount of disk space being taken up by the history on the Ethereum blockchain, which undoubtedly increases the difficulty of running a full node (by increasing the cost of running a node), thus limiting the number of nodes on the network quantity.
- Network congestion problem: When the computing demand becomes high, the low work efficiency of Ethereum will cause network congestion in the communication between nodes, thereby slowing down the execution speed of smart contracts. Based on this congestion, applications running on the Ethereum network cannot be designed to be overly complex.
What will change after “The Merge”?
Vitalik Buterin pointed out that when Ethereum’s mainnet, which processes transactions, and the beacon chain, which processes pledges, merge, all accounts, contracts, and transactions will run on the PoS chain, not PoW.
We know that the Ethereum Foundation has garnered a lot of attention since the Kintsugi Merge testnet was announced last December. The main purpose of the testnet is to test and find out what is wrong with the merged Ethereum.
With the merger of the Ethereum mainnet and the beacon chain, Vitalik Buterin is actually more focused on the third phase “The Verge”. He explained that this phase is about Verkle trees, a technology that makes validating the Ethereum chain and running nodes easier. Vitalik Buterin added:
It can be said that a major upgrade in 2021 paves the way for the future development of Ethereum. According to Vitalik Buterin, the Berlin hard fork and the London hard fork were the two most important upgrades. According to Vitalik Buterin, the London hard fork EIP-1559 upgrade not only reduces transaction fees, but also increases transaction speed.
Since the London hard fork, Ethereum appears to have destroyed 1,950,577.9 ETH as of press time. Not only that, but Ethereum will also prepare for the Ethereum “difficulty bomb” (a new mining mechanism to increase the difficulty of mining) that will be launched in June 2022.
It should be recalled that the launch date for the EIP-4345 difficulty bomb has previously been pushed back. It was originally scheduled to be launched in December 2021, but was later pushed back to May 2022. However, with the upgrade of Ethereum, PBS seems to be the focus of Vitalik Buterin. Vitalik Buterin explained that from a long-term perspective on Ethereum, “The fifth phase is The Splurge, which includes all the other important upgrades such as account withdrawals, PBS (PBS is our focus right now), EVM upgrades, etc. . But if we can do the merge and shard correctly, we can solve the biggest, most important problem.”
Can gas fees be reduced after “The Merge”?
The “Ethereum 2.0” upgrade will bring many changes and is one of the most anticipated developments in the history of the blockchain community. According to the information released by the Ethereum Foundation, Ethereum 2.0 will be completed step by step in multiple stages, but it is still unclear whether the gas cost will be reduced in the end.
There has been a lot of speculation in the Ethereum community that gas fees will be lower after Ethereum transitions to proof-of-stake (“The Merge”), but the Ethereum Foundation isn’t sure about that. In fact, gas fees are demand-based, and the computing space in each Ethereum block is limited; sharding may increase the computing power of the Ethereum network to reduce fees, but according to the Ethereum Fund According to the plan of the meeting, the introduction of sharding will wait until at least 2023.
Some experts predict that whether Ethereum gas costs can be reduced will depend on “Layer 2” applications built on the Ethereum network, which can do some independent computing work on their own, but still have to rely on Ethereum for the foundation. consensus verification.
Arguably, the Ethereum upgrade, and its impact, is complex and depends on a dynamic set of conditions — including network size, ether price, demand for NFTs, and node operators — that change on a daily basis will change dramatically. As to how this all plays out, and what impact changes to Ethereum will have on the wider crypto world, let’s wait and see.
It is undeniable that the conversion of Ethereum to proof-of-stake is indeed a pioneering move, and other cryptocurrencies may follow suit in the future, and even prompt some organizations or governments to fully accept cryptocurrencies. On the other hand, this approach can greatly boost the adoption of Ethereum and bring the cryptocurrency to a better future.