Key Takeaways

Last week, a successful merge was achieved on Ropsten testnet, where PoS was officially enabled.

• The merge on the Sepolia and Goerli testnet will take place in a few weeks.

• The merge on Ethereum mainnet is expected to be executed in late August to November, if everything goes well.

• To coincide with the eventual mainnet merge, EIP-5133 proposes to activatet the mainnet's difficulty bomb in August.

• Since Layer 2 scaling is well-developed, the focus of Ethereum has now shifted from sharding to The Merge, while sharding is expected to be supported in 2023.

  Over the past few years, we have seen a lot of community discussions about PoW and PoS. Regardless, it is already a fact that Ethereum, the largest ecological network in the crypto world today, will soon migrate from PoW to PoS. With the merge successfully completed on the Ropsten testnet, the community is even more confident about it.

Ropsten Merge

In the early hours of June 9, 2022 Beijing time, the merge on Ropsten was successfully completed. Launched in 2016, Ropsten is the longest running Ethereum testnet to date. According to the Ethereum core developer, about 14% of the validators experienced downtime during the merge of Ropsten, but most of them were caused by incorrect node configurations, which were quickly resolved. Moreover, the merge on Ropsten was considered almost perfect and became an important milestone in the migration of Ethereum to PoS.

The Merge will be executed on Sepolia (after about 3 weeks) and Goerli (after about 6 weeks) testnet one after another in the future. If all goes well, the merge of Ethereum mainnet is expected to complete between late August and November.

Despite criticism of high energy consumption and environmental impact, PoW has sustained the longest stable operation in history. PoS, by contrast, has not been tested for a long time, especially for a huge ecosystem like Ethereum. We have to seriously consider the potential impacts after migrating to PoS.

It is also important for Ethereum developers to make sure that their applications will work as normal after The Merge. According to official guidance from Ethereum, The Merge will have minimal impact on a subset of contracts, but given the potential impact on other components such as the front-end and tools, developers are suggested to perform a full testing and deployment cycle on Ropsten and provide feedback on potential issues.

The Path to The Merge

The characteristics of an ideal blockchain include sufficient transaction bandwidth, decentralization and security, and energy efficiency. To achieve these goals, Ethereum has planned the consensus mechanism upgrade based on PoS and scaling based on Layer2 and roll-ups. The Merge, which recently took place in Ropsten, is a monumental upgrade for Ethereum to address energy efficiency and improve decentralization and security.

There are two key milestones in Ethereum’s migration from PoW to PoS to achieve energy efficiency, namely The Beacon Chain and The Merge.

The Beacon Chain

The beacon chain supports nodes to become verifiers of the network by staking ETH tokens. The Beacon Chain is the consensus layer underlying the Ethereum PoS network, which officially launched in December 2020.

Before The Merge, the beacon chain and the actual execution layer are separate. The state of the PoS consensus layer is maintained separately by the nodes in the beacon chain but actually left unused by the blockchain.  PoW nodes maintain the states in the execution layer while serving the actual functionality of blockchain consensus.

The Merge

The Merge will activate the beacon chain as the functioning network for the Ethereum consensus layer, replacing the consensus mechanism that was actually controlled by the network of PoW nodes. The third block shown in the figure below is the key point where The Merge happens: the state of the execution layer in the block is inherited from the original PoW network, while the consensus layer state is inherited from the PoS network. After that, Ethereum switched to PoS mechanism smoothly.

Ethereum has designed a difficulty bomb mechanism to assist the switch from PoW to PoS. When the difficulty bomb is activated, the mining difficulty of the PoW network will increase exponentially and eventually freeze. As seen from the figure below, there have been three difficulty bombs that raised the difficulty of producing blocks in the history of Ethereum.

After the completion of the Ropsten merger, Ethereum will follow the path to start the Mainnet merge. According to EIP-5133, the difficulty bomb used to assist the Ethereum Mainnet Merge will be activated in August 2022.

It is worth noting that the goal of The Merge is to upgrade the consensus mechanism, which will not have a direct impact on tps. In the L2-centric scalability roadmap, the protocol layer is responsible to ensure decentralization and security. The task of reaching scalability will be placed on sharding and L2.

Final Thoughts

For narratives, the most intuitive impact of the transition from Pow to PoS is better sustainability (over 99% reduction in energy consumption) and scalability from sharding, which will be implemented in 2023.

PoS will at least help mitigate criticism of cryptocurrency from mainstream discourse since it’s environmentally friendly, and with the adoption of sharding, complemented by Rollup, we can expect to see a more scalable Ethereum in the future. We are entering the phase of a new narrative for Ethereum.

A year and a half have passed since the launch of Beacon Chain. There have been several dev delays during this journey, but with the successful merge of the Ropsten testnet, we are getting closer to The Merge.

The Merge is by far the most complex upgrade to Ethereum. In the image above, we can see that we’re very close to success. While reviewing the Ropsten Community Call, we really felt the excitement from the developers.

While the market may be in a continuing downward trend, we are still excited about this milestone and are confident in the future of Ethereum.