The much-anticipated Ethereum merger has finally entered the final countdown.
As of 15:00 on August 25, the Ouke Cloud Chain “Ethereum Merger Countdown” page shows that Ethereum is expected to complete the merger at around 5:30 in 21 days. Ethereum officials also issued a statement saying that the final date of the merger is expected to be around September 16.
Ouyi Novice Academy also made an easy-to-understand but detailed and comprehensive introduction to this hot event in the article “There are too many professional interpretations of Ethereum mergers, but this one is most suitable for novice users”. Readers can click to read directly.
In simple terms, merger is the process of converting Ethereum from a POW mechanism to a POS mechanism. The former uses computing power mining to generate blocks, which is beneficial to miners; while the latter adopts the method of staking assets, which is beneficial to users and developers. That is to say, the output of Ethereum is no longer mined by computing power. Ordinary users can complete transaction confirmation and receive rewards by depositing ETH assets on the chain, which means the unemployment of miners and the lowering of the threshold for user participation. In this regard, the miner group resisted in the form of a hard fork, that is, another Ethereum chain that continued to use the POW mechanism to compete with the POS version.
As the merger is approaching, Ouyi Novice Academy has sorted out 10 questions that must be read for the majority of users, and correspondingly gave comprehensive, clear and easy-to-understand answers to help novice users grasp the importance of this major event. Relevant based, or to further enhance the understanding of Web3.
1. What is the relationship between the merger and Ethereum 2.0?
Ethereum 2.0 is the ultimate goal of Ethereum, and the merger is only the first stage of realizing Ethereum 2.0, and the two cannot be equated. After the merger, 4 stages of optimization and upgrades need to be completed before the Ethereum 2.0 can be finally realized, and the realization time is estimated to be around 2025. At that time, the TPS of Ethereum (that is, the number of transactions that can be confirmed per second) can theoretically reach 100,000, but now it is less than 50.
2. Will the gas fee and TPS problem be significantly improved after the merger?
After the merger, the problems of high gas fees and low TPS will be alleviated to a certain extent, but the current predicament will not be completely reversed.
Because the sharding technology upgrade that completely solves the underlying performance problem needs to be completed in four stages after the merger. The merger stage is mainly to achieve the smooth switching of the consensus mechanism, that is, to switch from POW to POS safely and stably. But it is also worthwhile to be excited that the energy consumption of Ethereum will be directly reduced by more than 99% after switching to POS, because physical mining machines are no longer required, and the widely criticized pollution problem will be solved once and for all.
3. Why does the merger bring about the deflation of ETH?
In the POW mechanism, in order to maintain the network operation, Ethereum needs to pay a large amount of ETH as a fee reward. This part of ETH is actually an additional asset, and it will form an inflation model after entering the market, that is, more and more Ethereum in circulation. Therefore, this model that affects the scarcity of assets is bound to be detrimental to value preservation and appreciation.
After merging the POS mechanism, Ethereum does not need to pay additional fees to miners, and ETH theoretically does not need to be issued additionally. In addition, as early as 2020, Ethereum introduced the EIP-1559 protocol, which is a plan for the targeted destruction of miner fees. Therefore, the current stock of Ethereum will become less and less, and theoretically it will enter a deflation model. In the long run Conducive to the firmness of asset prices.
4. Why do you need to pledge 32 ETH to run a validator?
After the merger, validators replace miners and are responsible for confirming transactions. Then to become a verification node, there must be a certain threshold. If the number of ETH pledged is too low, it will cause a situation of vicious competition between large and small miners under the POW mechanism, slow down the speed of transaction confirmation, and cause Ethereum to be blocked and expensive. But why does it have to be 32 ETH? Because 32 is the fifth power of 2, and the message transmission under the POS mechanism is exponential, according to the design of the POS mechanism, transaction verification involves the mutual recognition of information between the submitter and the verifier, that is, the information submitter and the verifier. Confirmation needs to be completed in the shortest time according to the amount of pledged assets. After systematic calculation, 32 ETH is the optimal solution. Of course, this number may be dynamically adjusted with later performance optimizations.
5. Will Ethereum stakers sell their withdrawn ETH after the merger?
In fact, Ethereum has been preparing for the merger, and in November 2020, a small-scale staking mode was opened in advance. As of August 1, the data on the chain shows that the total amount of Ethereum pledged is about 13.132 million ETH. With the merger approaching, a considerable number of users holding ETH are worried that these pledgers will sell the pledged ETH, which will affect the asset price. According to the mechanism design of Ethereum after the transfer of POS, the pledger can only withdraw the pledged assets within 6 to 12 months after the completion of the merger.
Therefore, there will not be a large amount of pledged ETH sold at the initial stage of the merger. Even after the withdrawal date expires, Ethereum officials will restrict this, and the withdrawal of assets will need to be queued. To understand a little bit, the pledged asset library is like a pool, and the speed of water release will be very slow, like a trickle, rather than opening the gate to release the flood.
6. Why has the Ethereum merger been repeatedly delayed? Will this Ethereum merger be completed on schedule?
The merger of Ethereum is essentially a fundamental adjustment and change to the benefit distribution mechanism of all parties in the ecosystem. Completing this task itself has certain challenges. It should be noted that Ethereum users, developers and miners add up to tens of millions, even all over the world. In addition, Ethereum has developed rapidly in recent years, and the assets and applications on the chain have exploded, which directly increases the difficulty of the merger, because the technical security and interest coordination issues involved are more complicated, so the merger has been a few years ago. postponed so far.
Before the official merger of the mainnet, Ethereum has successfully completed 3 testnet mergers, that is, the three pre-rehearsal and training sessions before the merger. According to the official statement, the merger is expected to be completed around September 16. In this regard, Ouyi Novice Academy will continue to pay attention, and we will also make follow-up popular science interpretations on the latest situation.
7. Will Ethereum suffer from cyber attacks after the merger?
Under the POW mechanism, the security threat of Ethereum mainly comes from the network paralysis caused by the fact that miners who have mastered more than 51% of the computing power, that is, more than half of the transaction confirmation rights, stop producing blocks. After switching to POS, this problem will no longer exist, but new security problems will follow. Because the pledged assets correspond to the voting rights of key issues in the community, this gives large households who pledged huge amounts of assets certain authority to do evil. achieve your purpose.
That is to say, the more assets pledged, the greater the possibility of doing evil.
8. In the face of ETHs and ETHw after the hard fork, how do the top projects choose?
We also mentioned in the article “There are too many professional interpretations of Ethereum mergers, but this one is the most suitable for novice users”, after abandoning the POW mechanism, all miners will be unemployed and their jobs will be smashed, so the hard fork is Miners fight back against the means of consolidation. After the hard fork, ETH will split into two chains: ETHs (Pos version of Ethereum) and ETHw (Pow version of Ethereum). Project parties and users on the chain must choose a side station. From a common point of view, choosing the ETHs chain is the common will of the majority of developers and users, because it is more in line with their interests, and it can be seen from the current positions of all parties. At present, the majority of project parties express their support for ETHs, mainly including:
1. Two of the most mainstream stablecoin issuers: Tether (USDT) and Circle (USDC);
2. Top DeFi projects: Oracle Chainlink, lending protocol Aave, decentralized wallet DeBank, and stable currency trading protocol Curve;
3. NFT projects: Yuga Labs, the publisher of BAYC Boring Ape, etc.
However, most of the project parties who openly support ETHw are not in the head, and the volume and potential energy are smaller, and some KOL team miners are more out of their own interests, and there are few responders.
9. If the hard fork fails, where will the previous POW miners go?
The current public opinion environment shows that the hard fork is not widely supported, and it is more of a self-rescue action initiated by miners. Therefore, after the hard fork fails, miners can only go elsewhere. The main places are: turn to other public chain mining that supports POW mechanism, such as ETC; carry out computing power mining of some unpopular assets and projects, such as Grin; carry out other network computing power services other than mining.
It should be noted that the influx of large-scale Ethereum miners into other public chains will bring huge shocks to the output of other project assets, thereby affecting asset prices. Users who intend to invest need to make careful judgments, control risks, and choose When buying, such as ETC.
10. How can ordinary users get the dividends of this Ethereum merger?
For the majority of users, the biggest dividend of the Ethereum merger is the opening of the lay-earning mode of saving money and earning interest for everyone. That is to say, as long as the pledge is deposited in Ethereum, the reward can be obtained.
At present, the ideal way to participate is the ETH 2.0 lock-up mining node operator service provided by OKX. Users only need 0.1 ETH to participate in the project, and 100% of the on-chain revenue will be distributed to users. The mining income is dynamically adjusted according to the amount of locked positions on the chain, and the estimated annualized rate of return is between 4% and 20%.
The platform issues the mining certificate BETH at 1:1, takes a snapshot of the user’s position at 00:00 (HKT) every day, and divides the on-chain revenue proportionally according to the user’s BETH position, and distributes the mining revenue at 11:30 (HKT) the next day. When the ETH2.0 mainnet is launched, it can be exchanged back to ETH according to the amount of BETH held.
Ouyi reminder: users should pay attention to the market risks derived from mergers
Ouyi’s previous official announcement shows that Ouyi will support the Ethereum merger plan and will not suspend any ETH transactions before and after this process. In addition, if a forked chain and forked coins are generated during this process, the airdrop issuance and withdrawal of the forked coins will be determined after the evaluation and confirmation. It should be noted that before and after this major event, it is not ruled out that some organizations issue so-called “forked coins” in the form of hot spots, and users need to be cautious. All forked tokens traded in Euroeasy must go through an official review process, and tokens that have not been reviewed will not be open for trading.
Ouyi Novice Academy finally reminded that the market price of merging nearby Ethereum and related assets may fluctuate greatly, and users need to do position management and risk warning in advance.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/understanding-these-10-questions-novices-can-also-gain-insight-into-ethereum-mergers-and-forks/
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