There has been a lot of buzz around the Ethereum [ETH] network and its much-awaited upgrade, The Merge. As the network hopes to embark on its proof-of-stake [PoS] journey, it will bid farewell to its proof-of-work [PoW] days. With this, the network is sure to be revamped. While the environmental benefits are a given, the transition will bring immense changes to the network. Amidst this, speculations about how the network would bring about changes to the gas fee and transaction speed of Ethereum have surfaced.
Ethereum org debunks misconceptions
The Ethereum org decided to clear the air and push out all the misconceptions about The Merge. The platform debunked eight prominent misconceptions about the upcoming upgrade in a blog post.
- Gas fees
Gas fees have always been a significant issue for the network. While this has witnessed a notable drop over the last couple of months, the community has been urging the network to address it. Several believe that The Merge would lower gas fees. Vitalik Buterin, the network founder, had previously suggested that gas fees could be as low as $0.002 with rollups after the Merge.
The Ethereum org, however, suggests that the network capacity wouldn’t be increased. Therefore, the gas fees wouldn’t be reduced. The post read,
“Gas fees are a product of network demand relative to the capacity of the network. The Merge deprecates the use of proof-of-work, transitioning to proof-of-stake for consensus, but does not significantly change any parameters that directly influence network capacity or throughput.”
- Transaction speed
The network affirmed that transaction speed could witness a slight surge. However, not in a manner that users would notice. Similar to gas fees, the transaction speed would remain the same on layer 1.
“Historically, on proof-of-work, the target was to have a new block every ~13.3 seconds. On the Beacon Chain, slots occur precisely every 12 seconds, each of which is an opportunity for a validator to publish a block. Most slots have blocks, but not necessarily all (i.e. a validator is offline). Proof-of-stake blocks will be produced ~10% more frequently than proof-of-work. This is a fairly insignificant change and is unlikely to be noticed by users.”
With an upgrade of this magnitude, the community has been wary about possible downtime. The network, however, confirmed that there would be no downtime. The Merge has reportedly been designed to transition with zero downtime without disrupting the network or the users.
The network said,
“The Merge will be triggered by terminal total difficulty (TTD), which is a cumulative measure of the total mining power that has gone into building the chain. When the time comes, and this criterion is met, blocks will go from being built using proof-of-work in one block to being built by proof-of-stake in the next.”
In addition to these major misconceptions, the others include.
- Running a node requires staking 32 ETH.
No ETH is mandated to run a node, and individuals are free to sync their self-verified copy of Ethereum.
- Withdrawal of staked ETH
Staking withdrawals will be put on hold after the Merge, and staked ETH, staking rewards to date, and newly issued ETH immediately after The Merge would reportedly be locked on the Beacon Chain.
The Shanghai upgrade is expected to occur after the Merge. It should be noted that these assets locked in the Beacon Chain will be locked for around 6-12 months.
- Liquid ETH rewards post Merge
“Validators will not receive any liquid ETH rewards til the Shanghai upgrade when withdrawals are enabled.”
Validators will have instant access to the fee rewards/MEV earned during block proposals, even if the preceding comment that withdrawals are not permitted until the Shanghai upgrade may appear paradoxical. The fee tips and MEV would be credited to a mainnet account controlled by the validator.
- Stakers will exit after withdrawals are enabled
The network noted that validator exits are rather rate-limited, and this was done due to security reasons.
- Staking annual percentage rate [APR] to shoot up following Merge
A common misconception about staking is that the APR is expected to triple following the Merge. However, the network pointed out that the current estimations predict a 50 percent surge in APR. The Ethereum network negated the possibility of a 200 percent surge concerning the same.
Furthermore, the Merge is expected to occur sometime between the 15th and 16th of September. While Ethereum miners continue to protest this, the latest events show that the network was on track.