The Merge has been successfully finalised

Happy Merge Y’all! The Ethereum Blockchain is Now 99% More Energy Efficient

2 min read

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Ethereum’s Merge upgrade has finally gone through, causing cries of celebration to ring out across the cryptosphere.

A short while ago, prominent Ethereum commentator Sassal.eth confirmed that the consensus and execution layers had successfully merged, officially declaring the Merge a success:

Shortly afterwards Ethereum co-founder Vitalik Buterin also confirmed the Merge, announcing the historic moment with a casual, “and we finalized!”.

The biggest upgrade of any blockchain ever

Lachlan Feeney, founder and CEO of Labrys told the Chainsaw, “It’s difficult to overstate just how significant the Merge is. It’s certainly the biggest Ethereum upgrade by far, is widely considered the biggest upgrade of any blockchain ever, and many people would argue that it is up there with the creation of Bitcoin and blockchain itself.”

“For the last seven years, engineers have been so focused on the Merge it has come at the expense of other upgrades to the blockchain. Now that the Merge is complete, engineers can focus on a long-term roadmap of exciting upgrades, the collective impact of which will be huge,” he said.

Clearing up any confusion

While the Merge will massively reduce the Ethereum network’s energy consumption by replacing energy-guzzling miners with eco-friendly ‘validators’, it’s not going to make the network much cheaper or scalable.

In conversation with The Chainsaw, Ethereum developer Marius Van Der Wijden said that improvements to the network’s scalability will still rely significantly on Layer 2 scaling-solutions like Polygon, Optimism and Arbitrum.

“The often-quoted figure of 100,000 TPS put forward by Vitalik won’t be achievable for quite some time”, says Wijden.

“The Ethereum base layer will most likely never reach 100,000 TPS, these amounts of TPS can only be achieved with Rollups and Layer 2s.”

Wijden said the long-awaited reduction of gas fees and lowering of transaction costs won’t actually occur until the Shanghai upgrade, tentatively scheduled somewhere within the next six to nine months.

“EIP-4844 (Proto-Danksharding) will greatly improve the amount of space that rollups can use thus improving their TPS and lowering fees. EIP-4844 is being prototyped right now, it will most likely be implemented in the fork following the Shanghai upgrade,” he said.

Merge: What’s next for Ethereum?

The Bank of America thinks that this upgrade will begin driving institutional adoption into crypto at much higher rates, but simultaneously warned investors not to get too excited about the price of ETH in the short term.

“The significant reduction in energy consumption post-Merge may enable some institutional investors who were previously prohibited from purchasing tokens that run on blockchains leveraging proof of work (PoW) consensus mechanisms,” wrote Bank of America analysts Alkesh Shah and Andrew Moss in the report.

However, the pair noted continued gas fees and similar transaction fees may stifle ETH’s positive price action moving forward.

“ETH’s significant price appreciation from mid-July through mid-August may continue to fade as investors digest that Ethereum’s seemingly imminent transition to proof of stake (PoS) will not address scalability concerns or high transaction fees and shift to a wait-and-see approach regarding future upgrades”, the bank said.

Markets responded well to the upgrade, with ETH currently up 3% in the last 24 hours according to data from TradingView