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The Ethereum Merge

Learn about the highly anticipated Ethereum merge, the biggest upgrade to swap out the proof-of-work consensus mechanism.

Lesson 2

• 3 mins

What is Ethereum 2.0?

Now known as “The Merge”, it will upgrade the Ethereum Network, improving its speed, efficiency, and scalability. This will take Ethereum to new heights as it could drastically increase transactions, alleviate congestion, and reduce gas costs on the Ethereum network.

Upon completion, Ethereum will be one stop closer to her goals of becoming a scalable, transparent, and open network for decentralized applications and finance (DeFi).

Key features of Ethereum 2.0

  • Sharding – The merge would set the stage for scaling upgrades like sharding. Ethereum will be broken into 64 “Shards” that operate at the same time. This will drastically improve efficiency.
  • Staking – Ethereum will move to Proof-of-Stake Consensus, a much more energy-efficient method of maintaining the network.

What is proof-of-stake?

In a proof of stake consensus mechanism, there are validators instead of miners. Their major role is to propose new blocks, provide computing power, storage, and the bandwidth to validate transactions. The validators are given periodic payouts in ETH.

There is a deposit contract of 32 ETH that should be locked in by these validators. It is a type of security deposit that gets forfeited fully or partially in an event of any malpractice. This method is very effective in curbing malpractices.

What is sharding?

Sharding is the process of splitting one blockchain into multiple blockchains known as shards. It makes the entire network more efficient as a single validator does not have to handle the workload alone.

Every validator maintains information related to “their” shard. These validators are also shuffled between shards regularly to avoid any kind of manipulation. The Beacon Chain is used for the communication and coordination of the shards.

Initially, sharding was part of The Merge but the rise of layer 2 scaling solutions has shifted the priority of The Merge to making Ethereum transit from proof-of-work to proof-of-stake.

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