At 2:43am EST on September 15, 2022, the first Ethereum block was validated using Proof of Stake, signaling the success of the Ethereum Merge, one of the most anticipated events in blockchain and computer science history. The Merge shifted the Ethereum blockchain (native token ETH, or ether) from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) consensus mechanism, which has reduced the network's energy usage by about 99.5%. Ethereum now facilitates a 7-day average of over one-million transactions per day, at a volume of over $600 million per day, making the Merge an engineering feat akin to swapping a car's engine while it's driving on the Autobahn.
The Merge, Explained:
Technically, the Merge involved merging the Ethereum Mainnet protocol (the blockchain that supports transactions and smart contracts) using PoW with the Beacon Chain PoS network, which was a testnet launched in 2020 that ensured the PoS consensus mechanism worked before enabling it on the Ethereum Mainnet. In other words, the Beacon Chain operated in parallel with the Ethereum Mainnet until the Mainnet's protocol and the Beacon Chain's PoS consensus layer were merged. Merging these two chains meant swapping the Mainnet's PoW consensus mechanism with the Beacon Chain's PoS consensus mechanism; the Beacon Chain began accepting transactions from the Mainnet, packaged the transactions in blocks, and then added those blocks to a blockchain using the PoS consensus mechanism, all while the PoW miners shut their operations and allowed the PoS mechanism to take over. As a result, transactions are conducted on a single, new proof-of-stake network. Node operators staking 32 ETH tokens can become validators, which are given the ability to create new blocks, secure the network and validate transactions. Validators on the network receive rewards based on the amount of their staked ETH as an incentive to approve transactions and secure the Ethereum network.
Even though enthusiasts and the inquisitive around the world watched with bated breath for the first PoS-validated block, the event, which involved waiting until the first PoS block was created, was seemingly anticlimactic given the technical difficulty inherent in swapping the network's consensus layer without disruption or data loss; however, as discussed in my previous post, the implications are far reaching. Not only did the Ethereum network reduce its energy usage by about 99.5%, but the Merge resulted in a 0.2% reduction in total global energy usage - one of the largest decarbonization events in history.
One externality of the Merge's initiative to reduce energy usage is that Ethereum PoW miners, who invested heavily in mining equipment having no use aside from mining ETH, are stuck with their - sometimes leveraged -...
