Difference between revisions of "Ethereum Merge"

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The Ethereum Merge is the Merging of the Ethereum Main Chain with it's parallel running Beacon Chain
The [https://ethereum.org/en/upgrades/merge/ Ethereum merge] is an upgrade to [[Ethereum]] that swaps the current [[Proof of Work (PoW)|proof-of-work]] (PoW) [[consensus mechanism]] with a [[Proof of Stake (PoS)|proof-of-stake]] (PoS) consensus mechanism.


== Overview ==
== History ==
Since its birth in 2015, Ethereum has been pushing through the new limits of crypto, adding a block of transactions every 12 or 13 seconds on average through its Proof-of-Work consensus. Today, Ethereum’s Proof-of-Work security model is estimated to consume roughly 100 TWh per year, the equivalent of a country like the Netherland — or 3% of the US energy consumption. (The Ethereum Foundation shows a similar trend).
[[Ethereum]] initially launched with a proof-of-work (PoW) consensus algorithm in 2015, but the [https://ethereum.org/en/upgrades/vision/ vision] has always been for Ethereum to become an energy-efficient proof-of-stake (PoS) network. The Ethereum community explored various PoS consensus mechanisms, including  "[https://blog.ethereum.org/2014/01/15/slasher-a-punitive-proof-of-stake-algorithm/ Slasher]" and "[https://blog.ethereum.org/2015/12/28/understanding-serenity-part-2-casper/ consensus by bet]". In 2017, the community settled on “[https://arxiv.org/pdf/1710.09437.pdf Casper the Friendly Finality Gadget]” as the PoS finality system.<ref>https://ethmerge.com/</ref>
 
== Proof of Stake (PoW) ==
While Ethereum consumes half the energy bitcoin does, it still is a lot and the Ethereum community has been concerned for a while, in response, a new consensus algorithm has been under development for a while and it’s called Proof of Stake (PoS). Proof of Stake does not rely on solving math equations like Proof of Work (PoW) does so it can work with little computing power, thus low energy consumption for Ethereum.
 
Proof-of-Stake switches “miners” of Proof-of-Work with “validators”: to participate in the consensus, validators must lock some capital in the form of ETH into a smart contract — that’s the staking. Validators are then chosen randomly to propose the next block or to validate someone else’s block. In return, they get a reward proportional to their stake.
 
If a validator behaves fraudulently (frontrunning), its stake will be “slashed”: it will be taken away. This ensures that validators stay honest and keep doing their work correctly.
 
Proof-of-Stake replaces the heavy machinery necessary for Proof-of-Work with lightweight computing. There is no need to buy expensive equipment or spend huge amounts of electricity to participate in securing the network.
 
The move to Proof-of-Stake is estimated to reduce the energy consumption of the Ethereum network by 99.95%.


== The Beacon Chain ==
== The Beacon Chain ==
Even though Ethereum has not switched to Proof-of-Stake fully yet, staking had already been taking place since December 2020 on what’s called the Beacon Chain.
[https://ethereum.org/en/upgrades/beacon-chain/ The beacon chain] is a fully independent network which has a PoS consensus layer. It is running in parallel to the current Ethereum mainnet, where the consensus layer currently remains PoW. By keeping the PoS chain isolated from the main network, a ready-to-ship solution is being perfected without risking the decentralized application platform of the Ethereum PoW chain. A one-way bridge from the PoW network to the PoS network began accepting deposits (as of November 2020) and the beacon chain is currently [https://beaconcha.in/ live], ready for action and secured by millions of ETH deposited across over 240K validators. Since its launch in December 2020 the beacon chain has been finalizing 100% of its epochs with no downtime.


The Beacon chain is a chain that runs in parallel to Ethereum’s main chain and uses the Proof-of-Stake consensus. Right now, the Beacon chain does not validate any Ethereum transaction or smart contract execution, it only validates its own blocks.
While the beacon chain provides a solution to transitioning the Ethereum consensus algorithm, the Ethereum network will not live split in two forever. To fully realize the transition to PoS, Ethereum’s history on the PoW network will be preserved as the PoS consensus layer is merged in as a replacement for PoW. This will be done through what is known as “The Merge”. Once completed, the PoW consensus layer in Ethereum will be removed and consensus on all future blocks on the Ethereum blockchain will be achieved by the new PoS consensus layer. None of the transactions done on the Ethereum network will be lost in this transition - "The Merge" will have no effect on the data layer of the Ethereum network. "The Merge" is not the launch of a new Ethereum version, but rather an exciting upgrade to the consensus layer - bringing Ethereum in line with the original vision laid out at its genesis.<ref>https://ethmerge.com/</ref>


While a minimum stake of 32 ETH is required to become a validator, users with less cash can gather their funds into staking pools. This allows anyone to join the staking process and participate in the Beacon chain’s security.
== Why is Ethereum switching to Proof of Stake (PoS) ==


ETH staked cannot currently be “unstaked” or withdrawn. This will only be implemented when Ethereum has fully completed the merge to Proof-of-Stake.
Ethereum in its current state is using [https://ethereum.org/en/developers/docs/consensus-mechanisms/pow/ proof-of-work] (PoW) to ensure consensus amongst the thousands of nodes in the network. While PoW is reliable and secure, it is also energy intensive.


== Things the merge will bring: ==
Alternatively, [https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/ proof-of-stake] (PoS) on Ethereum guarantees the security of the network in a different way. In PoS, anyone with 32 ETH can ''deposit'' that ETH to become a ''validator'', a node that participates in the network's consensus algorithm. Finalizing a block requires 2/3 of all active validators to sign off on it. Should a malicious actor try to tamper with the underlying protocol by using a large number of validators to revert a finalized block (the equivalent of a "51% attack" in PoW) their funds are slashed — meaning they lose a portion of their staked ETH. This makes attacks extremely expensive.


* Less energy consumption
PoS does not require the same energy-intensive hardware as PoW. Any relatively recent consumer hardware should be capable of running the software required to operate a 32 ETH staking node. If you deposit more than 32 ETH, you will be assigned multiple "validator slots" by the protocol, but you will still be able to run them from a single computer, though hardware requirements go up the more you stake. Most estimates put the expected energy savings from the switch to PoS to be around 99%.<ref>https://ethmerge.com/</ref><ref>https://medium.com/@VitalikButerin/a-proof-of-stake-design-philosophy-506585978d51</ref><ref>https://vitalik.ca/general/2020/11/06/pos2020.html</ref>
* Possibility of no more MEV
* Constant block time (important to protocols for predicting)
* An already approved block cannot be reversed (there is a possibility in Proof of Work)
 
=== After the merging: ===
Right now, nodes running Ethereum software (Eth1 clients) take care of both execution of transactions and smart contracts and consensus (PoW).
 
Nodes of the Beacon chain run their own software, called Eth2 clients. Eth1 and Eth2 clients barely interact with each other.
 
After the Merge, nodes will run these two pieces of software in parallel: the Eth1 client for execution (with Proof-of-Work disabled), and the Eth2 client for consensus. The newer piece will coordinate blocks and talk to the execution piece who will take care of contracts and transactions.


== Sources: ==
== Sources: ==
1- https://coins.substack.com/p/ethereum-20
<references />
 
[[Category:Event]]
2- https://ethereum.org/en/upgrades/merge/

Latest revision as of 01:32, 3 May 2022

The Ethereum merge is an upgrade to Ethereum that swaps the current proof-of-work (PoW) consensus mechanism with a proof-of-stake (PoS) consensus mechanism.

History

Ethereum initially launched with a proof-of-work (PoW) consensus algorithm in 2015, but the vision has always been for Ethereum to become an energy-efficient proof-of-stake (PoS) network. The Ethereum community explored various PoS consensus mechanisms, including "Slasher" and "consensus by bet". In 2017, the community settled on “Casper the Friendly Finality Gadget” as the PoS finality system.[1]

The Beacon Chain

The beacon chain is a fully independent network which has a PoS consensus layer. It is running in parallel to the current Ethereum mainnet, where the consensus layer currently remains PoW. By keeping the PoS chain isolated from the main network, a ready-to-ship solution is being perfected without risking the decentralized application platform of the Ethereum PoW chain. A one-way bridge from the PoW network to the PoS network began accepting deposits (as of November 2020) and the beacon chain is currently live, ready for action and secured by millions of ETH deposited across over 240K validators. Since its launch in December 2020 the beacon chain has been finalizing 100% of its epochs with no downtime.

While the beacon chain provides a solution to transitioning the Ethereum consensus algorithm, the Ethereum network will not live split in two forever. To fully realize the transition to PoS, Ethereum’s history on the PoW network will be preserved as the PoS consensus layer is merged in as a replacement for PoW. This will be done through what is known as “The Merge”. Once completed, the PoW consensus layer in Ethereum will be removed and consensus on all future blocks on the Ethereum blockchain will be achieved by the new PoS consensus layer. None of the transactions done on the Ethereum network will be lost in this transition - "The Merge" will have no effect on the data layer of the Ethereum network. "The Merge" is not the launch of a new Ethereum version, but rather an exciting upgrade to the consensus layer - bringing Ethereum in line with the original vision laid out at its genesis.[2]

Why is Ethereum switching to Proof of Stake (PoS)

Ethereum in its current state is using proof-of-work (PoW) to ensure consensus amongst the thousands of nodes in the network. While PoW is reliable and secure, it is also energy intensive.

Alternatively, proof-of-stake (PoS) on Ethereum guarantees the security of the network in a different way. In PoS, anyone with 32 ETH can deposit that ETH to become a validator, a node that participates in the network's consensus algorithm. Finalizing a block requires 2/3 of all active validators to sign off on it. Should a malicious actor try to tamper with the underlying protocol by using a large number of validators to revert a finalized block (the equivalent of a "51% attack" in PoW) their funds are slashed — meaning they lose a portion of their staked ETH. This makes attacks extremely expensive.

PoS does not require the same energy-intensive hardware as PoW. Any relatively recent consumer hardware should be capable of running the software required to operate a 32 ETH staking node. If you deposit more than 32 ETH, you will be assigned multiple "validator slots" by the protocol, but you will still be able to run them from a single computer, though hardware requirements go up the more you stake. Most estimates put the expected energy savings from the switch to PoS to be around 99%.[3][4][5]

Sources: