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⛙ The Ethereum Merge|Common Misunderstandings of the ETH Merge that You May Have ⛙
September 12, 2022
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Recently, various signals have been released, and the much-anticipated ETH Merge is coming soon, which has sparked heated discussions. That said, as the plan for the Merge has been revised multiple times, there are many misunderstandings generated by the previous stereotypes. Here, we will sum up some of the common misunderstandings about the Merge and help you properly

Is the Merge equal to ETH2.0?

During the past six months, followers of the Ethereum community might have noticed that developers rarely mentioned the term Ethereum 2.0, which originally referred to a major upgrade set to help the network transition to PoS after it goes into the Serenity stage. However, as Ethereum’s roadmap evolved, the original roadmap witnessed several changes. In the beginning, Ethereum 2.0 included the Beacon Chain in Phase 0, the Shard Chains in Phase 1, and the Merge in Phase 2. After the Merge, the network will shift from PoW to PoS.

In reality, however, as the ETH developers started to work on the Beacon Chain in 2020, they noticed that the Beacon Chain could be developed faster than other facilities. In addition, although the team originally planned to tackle the network’s scalability problem via sharding prior to the Merge, as Layer 2 thrived, they decided to use Rollup technologies such as Layer 2 to complete the task of scaling the execution of transactions for the moment being and shifted the priority to the transition from PoW to PoS.

Following the changes in the roadmap, the Ethereum Foundation had to use different terms to avoid misunderstandings, the Foundation announced that it will abandon the term “ETH2”. To be ifferent terms. more specific, the current Ethereum mainnet is now called the “Execution Layer” that handles transactions and execution, and ETH2 is renamed the “Consensus Layer”, which coordinates and processes PoS. In other words, the Beacon Chain, which now runs Ethereum’s PoS, will become the coordination network of the Consensus Layer. Once the Beacon Chain and the Ethereum mainnet (now the “Execution Layer”) go through the Merge, the network will have officially completed its transition to PoS.

Will the Merge reduce Gas fees?

No, the Merge will only bring a shift in consensus, and the network will have to rely on sharding to cut Gas fees. As the first major post-merge upgrade, sharding will be able to reduce Ethereum’s Gas fees on L1. At the moment, the Ethereum community encourages users to migrate to L2 for cheaper transactions, and L1 will be used to ensure Ethereum’s security performance.

Will the Merge improve the network’s TPS?

The Merge will not improve the user experience of Ethereum by much. The shift from PoW to PoS alone will only slightly increase the network’s TPS. That said, sharding, the next step after the Merge, will genuinely boost Ethereum’s performance. According to the current plan of the ETH community, Ethereum will adopt the Danksharding proposal, which, coupled with Rollup technologies like Layer 2, would significantly improve Ethereum’s TPS if the proposal is successful. Concerning the Merge, Ethereum now intends to rely on the mainnet as a security guarantee, and the network encourages developers to create more Layer 2 solutions that tap into the Rollup technology. In the future, more users and projects will likely experience and develop applications on Ethereum’s Layer.

Considering that a massive amount of ETH staked will be released after the Merge, will ETH be dumped into the market?

After the Merge, stakers will not be able to withdraw the ETH staked right away, and their withdrawals will be unlocked in about 6 to 12 months. Furthermore, Ethereum has set a withdrawal/deposit queue. This limits the speed of making deposits and withdrawals by imposing a cap on the amount of ETH that can be deposited or withdrawn a day, which effectively avoids the impact of wild fluctuations.

Will Ethereum become more centralized after it switch to PoS?

Ethereum’s centralization has always been a controversial topic. ETH validators and PoW miners play the same role. Plus, ETH holders may not participate in the governance of Ethereum, and they can only update the blocks. In addition, as the current PoW mining on Ethereum comes with demanding requirements, and also because of the restrictions of mining operations, mining machines are often centralized in large venues, which means that the PoW nodes are not sufficiently decentralized. In contrast, PoS miners can mine ETH with regular PCs or even smartphones. Therefore, there is no evidence that Ethereum will become more centralized after it shifts to PoS.

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The Great Onboarding: US Government Anchors Global Economy into Web3 via Pyth Network

For years, the crypto world speculated that the next major cycle would be driven by institutional adoption, with Wall Street finally legitimizing Bitcoin through vehicles like ETFs. While that prediction has indeed materialized, a recent development signifies a far more profound integration of Web3 into the global economic fabric, moving beyond mere financial products to the very infrastructure of data itself. The U.S. government has taken a monumental step, cementing Web3's role as a foundational layer for modern data distribution. This door, once opened, is poised to remain so indefinitely.

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US Dept of Commerce to publish GDP data on blockchain

On Tuesday during a televised White House cabinet meeting, Commerce Secretary Howard Lutnick announced the intention to publish GDP statistics on blockchains. Today Chainlink and Pyth said they were selected as the decentralized oracles to distribute the data.

Lutnick said, “The Department of Commerce is going to start issuing its statistics on the blockchain because you are the crypto President. And we are going to put out GDP on the blockchain, so people can use the blockchain for data distribution. And then we’re going to make that available to the entire government. So, all of you can do it. We’re just ironing out all the details.”

The data includes Real GDP and the PCE Price Index, which reflects changes in the prices of domestic consumer goods and services. The statistics are released monthly and quarterly. The biggest initial use will likely be by on-chain prediction markets. But as more data comes online, such as broader inflation data or interest rates from the Federal Reserve, it could be used to automate various financial instruments. Apart from using the data in smart contracts, sources of tamperproof data 👉will become increasingly important for generative AI.

While it would be possible to procure the data from third parties, it is always ideal to get it from the source to ensure its accuracy. Getting data directly from government sources makes it tamperproof, provided the original data feed has not been manipulated before it reaches the oracle.

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