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Ethereum merge

Ethereum: The merge which will reduce gas costs is a myth but there is a solution

 

The merge of the two Ethereum chains is now imminent. According to the calendar, they should become one from September 15 if there is no hitch. And The Merge is an event that investors are particularly interested in.

As with other major updates, including Cardano’s Alonzo hard fork, the merge is an opportunity for traders. In fact, in recent weeks, the price of ether has been largely driven by this prospect.

However, The Merge will not solve all of Ethereum’s problems. Indeed, many people believe that The Merge will positively impact fees on Ethereum. The Ethereum Foundation is trying to put an end to this myth once and for all.

Ethereum is currently evolving to a version called 2.0 in several stages. The modifications involve various changes including a shift in the blockchain consensus from proof of work (mathematical competition of computing power) to a proof of stake (crypto-economic mechanism) based on a reward dynamic.

In December 2020, a new chain called beacon chain was launched by Ethereum. It operates in parallel to the current network and its sole mission is to ensure a consensus in Proof of Stake. In other words, it means that the blocks created by the transactions made on Ethereum will be validated by the beacon chain in Proof of Stake.

Won’t the merge reduce gas costs?

At their last meeting, the developers decided that the merger would take place on September 15.

As the fateful merge date approaches, the Ethereum Foundation wanted to put to rest a myth that has been running for several months.

On its blog, the Ethereum Foundation gives real-time indications on the contours of this transition, which should occur soon, so many doubts continue to hover.

No, The Merge will not reduce fees on Ethereum.

As a reminder, the “gas” fee is a commission for making a transaction on Ethereum and is currently high. These high fees have led some users to migrate to lower fee blockchains such as Cardano or Solana.

Although until now most observers of the system thought that the merger would bring these rates down, but this will not be the case.

Gas rates are a product of system demand versus system capacity. The merger prohibits the use of proof-of-work, moving to proof-of-participation by consensus, but does not significantly change the parameters that directly influence network capacity or throughput.” The Merge will not reduce the capacity of the network, reads the blog post.

Indeed, it is common to see Internet users announcing a reduction in fees after The Merge. A common idea that makes sense. The switch to Proof of Stake is indeed part of the general plan to improve the scalability of Ethereum.

However, the Proof of Stake does not actually improve scalability. Nevertheless, this update improves the functioning of second layer solutions and paves the way for the deployment of Sharding.

But rollups do!

In this context, the foundation reminded us of one of its priorities to reduce its costs, thanks to rollups. A rollup is a technological solution that increases the scalability of the Ethereum network (i.e. the number of transactions a blockchain can perform per second), reducing a significant part of the gas costs.

After a transaction, rollups offer the new state of the mainnet or ‘certify’ the transaction. With optimized rollups, transactions are encoded on the Ethereum mainchain, further optimizing them by reducing gas costs, reads the Ethereum mainchain blog. foundation.

With a roadmap focused on accumulation, efforts are focused on increasing user activity at Layer 2, while enabling the Layer 1 backbone to be a decentralized and secure settlement layer, optimized for storing accumulation data to make accumulation transactions exponentially cheaper. The transition to proof-of-participation is a critical precursor to achieving this goal, the Ethereum Foundation explained.

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