After the merger of the Mainnet with the Beacon Chain, the Ethereum blockchain successfully transitioned from proof-of work to proof-of stake (PoS), consensus.
The Merge was held on Sep.15, when the network switched to PoS seamlessly. Hardware-based miners were replaced by validators who stake Ether ( Ethereum) in order to process transactions, add blocks, and maintain the network.
What happens next is the most important question in cryptocurrency. The Merge follows a long-term roadmap that has been used by the Ethereum Foundation.
Happy birthday beacon chain!
This is an updated roadmap diagram showing where Ethereum protocol development stands and what’s next.
(I know this diagram is incomplete, but it does cover a lot of important information!) pic.twitter.com/puWP7hwDlx
— vitalik.eth (@VitalikButerin)
December 2, 2021
Vitalik Buterin, Ethereum’s cofounder, previously described a five step, gradual process that will bring smart contract blockchain to what was called the “Endgame” of Ethereum’s development.
The end goal would see the network capable of high block frequency and block size as well as the ability to process thousands of transactions per second while remaining sufficiently trustless and censorship-resistant.
The Merge was the first of five steps in this five-part process. Since then, a number Ethereum developers, ecosystem participants, and commentators have further developed upon it. The Merge’s key feature is the dramatic reduction in power consumption. Ethereum’s energy use has been reduced by 99%.
Buterin quoted Justin Drake, an Ethereum researcher, as saying that the Merge would also reduce global electricity consumption by 0.2%.
“The merger will reduce the worldwide electricity consumption by 0.2%” @drakefjustin
— vitalik.eth (@VitalikButerin)
September 15, 2022
A second significant change that was brought about by the shift towards PoS is the reduction in issuance of ETH via rewards to validators who maintain the network. This makes ETH a deflationary asset.
2023 is the year Ethereum will implement Sharding. This important step increases the scalability and accessibility of the blockchain’s data storage and retrieval capabilities.
The Ethereum Foundation defines sharding to be the process of splitting a database horizontally in order to distribute the network’s workload. Ethereum will combine sharding with layer-2 rollups to split the large amounts of data across its network.
This will reduce network congestion and increase transaction speed. This is the decentralized alternative for making a database larger, which eliminates the need to have validators store all the network’s data.
This means that an average user could run an Ethereum client or node on their personal devices. The increased decentralization makes the network stronger.
The Verge, Purge, and Splurge
Over the next few decades, the last three steps of Ethereum’s continued development after the Merge will take place.
The third section of Ethereum’s continuing roadmap, the verge, was outlined by Buterin. This step will see the introduction of verkle tree which will optimize data storage as well as node size.
In June 2021, Buterin described in depth. Verkle trees perform a similar function as merkle trees. They total all transactions in a block, and provide proof of the complete set of data to the user who wants to verify its authenticity.
Verkle trees have a key property: they provide a much higher proof size.
Although cryptography is more complex than the other methods, Buterin pointed out that a reduction in the data size of proof could be enough to allow stateless clients to exist.
Purge is a process that removes unnecessary historical data to reduce network congestion. This will reduce the data required to store a validator. Buterin claims that this will allow the network to process around 100,000 transactions per second.
What should I do?
Cointelegraph previously explored. To become full validators on the Ethereum blockchain, stakers must commit 32 Ethereum. Common misconception was that these stakers would remove their staked Ethereum once the Merge was completed.
Validators cannot withdraw staked Ethereum until the Shanghai upgrade occurs. This is scheduled to occur in the next twelve months. Transaction fees (miner extractable value) can be received by validators. These fees are credited to the validator’s non-staking account.