COMING SOON: Most IMPORTANT Upgrade For Ethereum

COMING SOON: Most IMPORTANT Upgrade For Ethereum

Have you heard of the shadow fork? It’s not a trendy new diet or a secret society of elite chefs. It’s actually one of the most recent steps in the progression to the Ethereum Merge, where the network will shift from proof-of-work to proof-of-stake. This is the most anticipated update in the history of Ethereum, which will bring significant changes to the network and narrative of Ethereum itself. And it probably has some major implications for the price as well.

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The Merge

Today you’re going to know about The Merge. This is an event that the Ethereum community has been looking forward to for years and something that critics said would never happen. Now, it seems like the time has finally come. And developers are expecting The Merge to take place sometime in the next few months. Possibly even this summer. Tim Beiko, the Community Manager for the Ethereum Foundation, says that the current estimate for The Merge is July, but this is not a definite date.

The Ethereum Foundation has made many estimations before that all got pushed back, but each time, the time gap gets smaller and smaller, which means that a ton of progress is being made behind the scenes. Now, at this point, it’s definitely happening soon, but it’s hard to predict the exact timeframe because the final rollout is dependent upon the activity that takes place on the testnets. So far, testnets have shown that developers are very close to completion. There are still some small bugs that need to be worked out before the official launch. This is why developers have been careful not to give a specific date. Overall, the testnets have been a total success so far, proving that the fundamental infrastructure of this network is strong while identifying small problems that might potentially happen and taking measures to ensure that its holes are patched before The Merge.

Last week, the first shadow fork of the Ethereum maintain launched, which allows developers to stress test Ethereum’s proof-of-stake Beacon Chain without actually risking the stability of the main chain. The shadow fork will be exactly the main chain in every way, which will create the perfect environment for testing and experimentation. It’s an actual concept that was introduced by an Der Wijden, a developer from the Ethereum Foundation. During tests on the shadow fork, a few bugs were discovered with two Etherium clients, Nethermind and Hyperledger Besu.

According to Paritosh Jayant, Paritoshe Ethereum foundation, the bugs with these clients need to be fixed before The Merge happens. If you aren’t familiar with how clients work on Ethereum, clients are essentially the different pieces of software that run nodes on the network. With Ethereum, there are a variety of different clients that contribute to the security of the network in a decentralized fashion. This makes the network more resilient because if one client goes down or has some issue, there are still many others to keep the network up and running. When it comes to important upgrades like this though, all of these clients need to be on the same page when things kick-off to ensure that everything runs as smoothly as possible.

Most of us have forgotten by now, but the Ethereum network actually faced some challenges like this during the launch of EIP-1559 last summer, and that happened on the mainnet, not a testnet. There was even a chain split and a small fork on the Ethereum chain that caused a temporary panic. The splits were caused by a bug in an older version of Geth, one of the most popular Ethereum clients. Luckily, this was resolved by developers very quickly, and the network never actually went down due to its client diversity, which is why it went unnoticed by most users. Still, this is the kind of thing that developers want to avoid because it’s much easier to fix before launch. Developers also have been encouraging validators to use a diverse set of clients instead of just opting for the default or most popular options.

The Ethereum’s mainnet

Currently, Prysm is the most popular client with over 60% of the network, which is a lot higher than most developers want to see. They’re hoping that over time, that number will get much lower than 50%, which will allow that aspect of the network to decentralize even further. When The Merge does finally take effect, industry insiders are expecting a major rally for Ethereum. This could be a catalyst for the rest of the crypto market as well if the price does get a good pump as many are expecting. There’s still plenty of confusion about The Merge though.

Some people are under the impression that this upgrade will lower gas fees, but unfortunately, that isn’t the case. The gas prices on Ethereum’s mainnet will not get significantly lower until the implementation of sharding is implemented, which is at least a year or two away. To take care of the gas problem now, we already have layer 2 networks that are already available to use like Polygon. And these networks will continue to stay relevant even after sharding becomes implemented. Because the demand for block space will be so high, the overflow space will always be needed. There’s also some confusion about how the staking lockup works, with many people suggesting Ethereum stakes will rush to the exits to cash out as soon as The Merge happens. But the incentives for staking are high, so it’s an unlikely event that a significant number of people would want to cash out right away. But this scenario isn’t even physically possible with the way that the designed network.

ETH Staking

To stake your ETH, you need to wait in line and also need to wait in line on the way out as well, which means the unstacking will be done in an orderly process, not all at once. This is very similar to investment tranches and private sales. This isn’t about price. This is necessary to maintain the security of the network.

It will also be sometime after The Merge until people can start unstacking, so there won’t be this immediate sell pressure that some people are expecting. That’s one of the things that is so bullish about The Merge. There will be a lot less sell pressure on Ether. Instead of miners that need to sell off their coins to pay for their expenses, stakers are forced to lock their assets up for extended periods, creating an entirely different market dynamic where Ether is far less liquid. The Merge will also bring in a major narrative shift for Ethereum, giving the community a Jedi mind trick to allow them to entirely bypass the environmental FUD that the corporate media loves to throw at our industry. The hate against proof-of-work might be entirely baseless, but these narratives have a huge impact on media sentiment and institutional investments, which are some of the biggest market movers.

We all saw what happened last year when Benedict Elon and media sources in both crypto and the mainstream worked in tandem with institutional investors to tank the price of Bitcoin with a wave of environmental FUD. Everybody remembers those days. These are the battles that Etherians will no longer have to fight anymore, and instead, they have a marketing gimmick that I’m sure some developers will be happy to take advantage of.

This article is a transcription of a video made by BitBoy Crypto

Original video: https://youtu.be/pKQDDscnpcA]