Ethereum merger is near: five questions and answers you care about most

As The Merge nears, the community’s impact on the merger and future Ethereum roadmaps are becoming more frequent. In this article, we will focus on this theme, and extract five common problems to draw the key points for everyone.

When will it be merged?

There is currently no definite official announcement time, but the community generally believes that it will be between June and August, because it is expected that the difficulty bomb will detonate at the end of June.

Ethereum merger is near: five questions and answers you care about most

Is it possible to delay that? possible.

Ethereum Foundation community experience Tim Beiko recently stated that in mid-April, he will discuss with the community whether it is necessary to delay the difficulty bomb again. The priority of a safe and stable merger is bound to be higher than the rapid realization of the merger. In addition, he also said that although the delay of the difficulty bomb was about 6 months in the past, as long as all aspects are suitable, a delay of one or two months is also possible.

Why: The inflation rate of ETH dropped by 90% after the merger, and the price TO THE MOON?

The Ethereum merger is actually a transition from PoW to PoS.

Ethereum under PoW is additionally issuing ETH in the form of block rewards, and the current annual inflation rate is about 4.3%;

Ethereum under PoS will issue additional ETH in the form of pledge rewards, but the pledge rewards are dynamically adjusted according to the total amount of pledge. Here, assuming that the pledge amount is 10 million ETH, the annual inflation rate is about 0.43%; (Note: inflation The rate rises with the amount of staking, so the specific annual inflation rate will change)

Under this assumption, the inflation rate of ETH will drop by 90%, which is equivalent to completing three halvings.

In addition, with the cooperation of EIP1559, the ETH destroyed by the handling fee may exceed the newly issued ETH, realizing the deflation of ETH, which is a long-term positive for the price.

On the contrary, ETH will usher in a huge sell-off after the merger, why?

Those who hold this view mainly believe that the cost of a large amount of ETH pledged into the beacon chain deposit contract in the early stage is extremely low, and there are several times of profit.

There is indeed such a possibility, but we can consider the following factors:

  • The function of activating the withdrawal is currently included in the Shanghai upgrade. The Shanghai upgrade will be the first hard fork after the merger. Given the uncertainty of the current time and the possible bearishness of the market (even if it picks up recently), it is eager to profit Closed investors can hedge through derivatives as well as over-the-counter transactions.
  • Similar to the deposit queue, withdrawals also need to be queued, and there can only be a maximum of 1125 validator withdrawals per day (3.8w ETH in total).
  • At present, there are many liquid pledge schemes similar to Lido in the market, and some pledgers can actually withdraw at any time.
  • When there is a large number of withdrawals, the staking yield will increase, which in turn attracts investors to deposit.

Is the pledge income expected to be close to 10% after the merger? How is it calculated?

It is possible. You must know that after the merger, there will be three sources of pledge income:

  • Staking Inflation Rewards
  • fee income
  • MEV

For specific data, we refer to the calculation model of Ethereum researcher Justin Ðrake, and we can calculate the annualized income of 9.6%.

However, it is worth noting that this is only our ideal yield in the early stage of the merger. In the long run, the yield may fluctuate between 3.3% and 5.4%.

Ethereum merger is near: five questions and answers you care about most

What is the latest future road plan for Ethereum?

In general, the roadmap for ETH 2.0 (which the foundation has already dropped) has actually changed twice.

In the beginning, the roadmap of ETH2.0 was a classic three-stage:

  • Phase 0: Beacon chain with PoS as consensus mechanism
  • Phase 1: Data sharding, but not compute sharding
  • Phase 2: Add execution capabilities to all shards (compute shards)

However, on November 18, 2020, at the fifth AMA event of the ETH2.0 research team of the Ethereum Foundation, Buterin has made it clear that the ETH2.0 roadmap has changed and will be centered on Rollup to promote ETH2. 0 implementation:

  • We will not emphasize the importance of Phase 2 for the time being. We mainly recommend Phase 1 to implement data sharding to achieve sharded Rollup; the current TPS of Ethereum is about 15~45, and the use of Rollup can increase the throughput by 100 times. At the same time, 64 shards of ether The throughput of the square network can be increased by 64 times, and the two superimposed, that is, the sharded Rullup can achieve 6400 times of expansion.
  • The beacon chain will have the execution function, that is, after the PoS is merged, the beacon chain block will directly contain transactions.

Recently, there have also been some updates in the sharding scheme. In the future, Ethereum is more likely to adopt a sharding scheme called Danksharding, which can effectively optimize the cross-domain MEV problem and help the implementation of sharding Rollup.

But before that, let’s take a look at the PBS (proposer-builder separation, block proposer and builder separation) solution proposed by Buterin for the cross-domain MEV problem.

In the previous model, miners were responsible for producing blocks, they picked transactions from the mempool for sorting and inclusion in blocks, and they also had the right to censor certain transactions.

In the design of PBS, this responsibility is divided into two roles: block proposer and block builder.

The block proposer is responsible for receiving transactions from the mempool and creating a list crList containing block transaction information to pass to the block builders. Block builders reorder transactions in crList and build blocks with the aim of maximizing MEV, and then submit their bids to the block proposer, who chooses the highest bidder as the valid one block.

After learning about PBS, it’s easier for us to learn about Danksharding.

Our previous sharding scheme is a parallel data sharding mode, that is, each shard and beacon chain has an independent verifier. Although an independent verifier is more conducive to decentralization, in the context of the current prevalence of MEV, in the Driven by profit, it will inevitably lead to the centralization of block producers (for example, a large number of verification nodes are running under the same entity, which is beneficial to MEV). In addition to adopting the PBS architecture mentioned above, Danksharding also made a change that all beacon block and shard data will be uniformly verified by a committee of validators.

Ethereum merger is near: five questions and answers you care about most

Strictly speaking, this design is a simplification of sharding. There is no complex data access synchronization problem between shards, and it has many advantages:

  • It can effectively reduce the network workload (nearly a hundred times);
  • Data synchronization between L1 and L2 is accelerated;
  • crList enables instant transaction confirmation on L1;
  • MEV marketization to solve the potential centralization problem of validators

Therefore, at present, the latest route planning of Ethereum can be summarized as Rollup-centric + Danksharding. However, Danksharding is still in the theoretical stage, and the overall route may change in the future.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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