Vitalik Butrin, founder of Ethereum, spoke at CC Ethereum community conference just last week and laid out what to expect for Ethereum for the merge and then the upgrades going forward. If you hold Ethereum, this is relevant to you because the merge is happening September 19th of 2022. I want to go over what these upgrades mean to you as an investor. So not only is the merge happening this year, but then the surge, the verge, the purge, and the splurge. Those are the five big upgrades happening to Ethereum, and yes, those are the real names of Vitalik.
“The five categories of like stuff that’s happening in Ethereum protocol land right where there’s the merge, the surge, the verge, and then a bit lower is going to be the purge and the splurge. So the merge is a proof-of-stake, the surge is short and the verge is vertical trees. The purge is like things like state expiry and deleting old history. And the splurge is basically just all of the other fun stuff.”
So, we’re going to break it down. What does each of these five stages mean to you, if you hold ETH? Vitalik fields are still worth making in the long term that isn’t necessarily covered in those five stages. What Vitalik believes could be future issues for Ethereum?
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What is the Ethereum Merge?
First up, what is the merge? And by the way, emerge by itself will not solve Ethereum’s scalability issues. A faster network really won’t come until the surge, the verge, and the other phases after the merge. But if I had to define the merge happening in September in one sentence, it would be the full transition to proof-of-stake. So here are the details. The merge it is the merging of the execution layer, the current Mainnet of Ethereum where we all use and know, and the Beacon chain, the new proof of stake layer. With this, Ethereum has now become a deflationary asset, meaning reduced issuance as well as cutting power usage of the network by 99%.
So essentially, it makes ether a deflationary asset and makes it eco-friendly in terms of power usage. Moving even deeper into this merge,
This decline in emissions is very positive. Currently, ETH’s issuance is causing around a 3.2% yearly inflation after the merge. Ethereum’s supply will decrease by almost 1% based on seven-day supply data, meaning ether will finally become deflationary. So, ETH holders obviously love this.
Obviously, this does much based on how many people at any given time are staking on the network. But this is a huge incentive to keep the network secure. As of today, how many people are choosing to stake? While a few months ago it was around 10 million, today it’s closer to 13.15 million Ethereum staked in the deposit contract.
The combination of tokens being staked and the decrease in emissions could potentially lead to an Ethereum supply shock. So excitement is growing for a deflationary asset, which is half of this merged upgrade, and the other half cuts power usage by 99%. This is what some speculate will be huge for institutional adoption.
So on September 19th of 2022, this is what you should expect for the merge upgrade. Now obviously, that’s only one of five. Let’s quickly break down these other four.
What is the Ethereum Surge? (Coming 2023)
This is one’s pretty self-explanatory. Sharding is the breaking down of huge chunks of information into smaller pieces. So it’s easily movable and accessible, making the Ethereum network more scalable.
What is the Ethereum Verge?
Number three is the verge that in simple terms is defined as statelessness through vertical trees and related features very quickly. Let’s just define statelessness. Stateless means there is no record of previous interactions and each interaction request has to be handled based entirely on the information that comes with it. Stateful and stateless are derived from the usage of a state as a set of conditions at a moment in time. So this may sound a little complicated. I’m by no means a programmer, but just to clarify this one more time. So we all get it.
What is statelessness in programming? It’s when the infrastructure of a system prevents a program from maintaining state, meaning it cannot take information about the last session into the next, such as settings the user chose or conditions that arose during processing. And what this means to the ETH holders for the verge phase specifically, I believe, is essentially meant to reduce congestion on the network.
What is the Ethereum Purge?
Next up, the fourth out of five phases is the purge.
Another phase was needed to make ETH more scalable.
What is the Ethereum Splurge?
And then the last phase is the splurge.
What do you think about the merge and the following phases?
Vitalik Warns MORE Upgrades for Ethereum Coming in 2032
The one thing I thought was interesting is what Vitalik feels needs to be done to a theory may need to be done even after all those five phases, meaning change is still worth making and thinking about for the long term. This is about a three-minute clip I want to share with you. The one thing I’ll say is when he gets to what to expect in 2032, he does mention a word called “MEV” as defined on Ethereum’s website. It refers to Maximum extractable value, or the Maximum value that can be extracted from block production in excess of the standard block reward and gas fees by including, excluding, and changing the order of transactions in a block. I.e., what optimizations can we make to get the most value out of each Ethereum block? Let’s read what Vitalik said.
“So I do think that there are changes that are worth making in the long term, right, so I personally am not predicting that the Ethereum network isn’t going to act like anything that undergoes literally zero change, like here are some examples that I think are actually worth the upgrade from quantified resistance computers.
There’s a big chance that they’re eventually going to come. Once quant computers come, we have to upgrade to different cryptography. So can’t use elliptic curves. Can’t use pairings, can use hashes, can use starks, can use lattices right, can use isogenies. So basically, once quant computers come, we are going to have to kind of get used to using different tools, which is obviously something that the ecosystem will have to learn its way around. It is something that involves some sacrifices. But it’s something that just has to be done, if you want Ethereum to be secure. If ZK-EVMs work well, increasing transaction space in the base lawyer.
So if we have good circuit legibility and we have a very good ZK-A implementation that can snark verify the EVM, then that’s something that could be applied in the base layer. You could start by adding more transaction space. You can start using more data space or more of this data availability space to add transaction space. So things could be done there if much better cryptography comes out that lets us massively improve efficiency and simplicity. We should use it right.
So today I’m advocating and a lot of people have been advocating for Ethereum to switch from hex Markel Patricia trees to verbal trees. Maybe in the future, just hashes and arithmetically friendly hashes are going to be de-risked enough and friendly enough. If that’s the case, we’re going to want to actually give up on vocal trees and do stark proofs of arithmetic-friendly hash merles trees instead.
If that happens, then like, I think we should do it and also, I think we should keep an open mind because, like, we don’t know what the needs of 2032 are going to be in demand. So one example of this is like the whole MEV situation right now, in which the centrality of MEV is an issue that the Ethereum protocol needs to really build and work around. That’s something that we weren’t really aware of back in 2019. We became aware of it in 2021, and now it’s well understood. And it’s part of how we think about the Ethereum protocol in 2022, right?
So, there could be other things like that in the future, like, you know, we might have to think in some different way about how to deal with 51% attacks. So you might have to think about adding other kinds of features to ensure stake decentralization, because there are more things that could happen, and there are always unknown unknowns. But at the same time, the number of unknown unknowns is something that I do think should decrease over time. So basically, the challenge here is how do we balance all of these different demands?”
[This article is a transcription of a video made by Altcoin Daily]
Original video: https://youtu.be/aW-DGKW9MBU