The Merge integrated Ethereum’s original execution layer with its new proof-of-stake consensus layer, officially transitioning the network’s consensus mechanism to proof-of-stake.
Formerly referred to as Ethereum 2.0, Ethereum’s consensus layer has now fully merged with the original blockchain (execution layer). The Merge was completed on September 15, 2022, marking the Ethereum network’s transition from proof-of-work (PoW) to proof-of-stake (PoS). According to the network, the Merge has brought down Ethereum’s energy consumption by around 99.95%.
From a technical perspective, the Merge saw Ethereum’s original execution layer, or the mainnet, merged with its new PoS consensus layer called the Beacon Chain. The Merge is just the first step in Ethereum’s development roadmap, which includes succeeding stages such as The Surge, The Verge, The Purge and The Splurge.
According to Ethereum co-creator Vitalik Buterin, the Merge marks about 55% of the development work set to be done on the network. Ultimately, the goal is to make the network more scalable, sustainable and secure while remaining decentralized.
The Merge eliminated the need for PoW, enabling the network to be secured by Ethereum staking. Staking gives Ethereum holders a chance to collect rewards by providing the necessary computing power to validate transactions and secure the network. This also means that since the Merge, all transactions on the network are now being validated by Ethereum stakers instead of miners.
The second major shift triggered by the move to PoS is the diminished issuance of Ether (ETH) via rewards to validators for their efforts in preserving the network, resulting in ETH becoming a deflationary asset.
Currently, Ethereum’s staking mechanism only accepts deposits that cannot be withdrawn. At the moment, billions worth of ETH is staked on the network — and stuck therein — until a withdrawal feature is added by Ethereum’s developers down the line.