Understand Ethereum Merge and Fork in Three Minutes BitKeep Hotspot Insights

Author: BitKeep

From a low point of around $900, ETH has skyrocketed to about $1900 now, leaving many investors who were waiting to buy the dip at $500 kicking themselves. The rise of ETH is closely tied to the upcoming Ethereum Merge upgrade, and as the Merge approaches, the market has responded increasingly positively. In a sense, it can even be said that the current market is a "Merge Bull."

What exactly is the Ethereum Merge? Why does the Ethereum Merge have such a significant impact? What effects will the Ethereum Merge have on ordinary users? How can one participate in the hot topics of the Ethereum Merge and forks?

In response to these questions, BitKeep has launched a special feature titled "Hotspot Focus! Ethereum Merge and Forks," providing articles to clarify doubts and discover more market opportunities.

This article is the first in the series: Understand the Ethereum Merge and Forks in Three Minutes.

1: What is the Ethereum Merge?

The "Merge" is a significant upgrade to Ethereum's consensus mechanism, transitioning from PoW (Proof of Work) to PoS (Proof of Stake). It is called the "Merge" because this process merges the Ethereum Beacon Chain (consensus layer) with the existing chain (execution layer), discarding the PoW component of the execution layer.

2: Why Merge?

The reason for the Merge primarily answers why Ethereum is transitioning to PoS.

The congestion of the Ethereum network and the high Gas fees are evident to everyone. To improve Ethereum's performance, Ethereum founder Vitalik Buterin proposed a sharding solution, but sharding technology contradicts the PoW mechanism, making the shift to PoS a necessary choice.

In Vitalik's view, compared to PoW, PoS is a superior blockchain security mechanism: under the same cost conditions, PoS offers better security; PoS systems are easier to recover after an attack; and PoS is more decentralized than ASIC mining.

Additionally, in the context of carbon neutrality, PoS can reduce electricity consumption by 99% compared to PoW, addressing the criticized energy waste and carbon emissions caused by cryptocurrency mining.

3: Why is the Ethereum Merge so closely watched?

The Ethereum Merge can be considered one of the most important events in cryptocurrency history because for a large ecosystem and economy like Ethereum, changing the consensus mechanism is akin to changing the engines of a plane in flight. Its importance is self-evident, and the risks involved are substantial, which is why the Merge has been repeatedly delayed and tested.

Moreover, the Merge is closely watched because the change in consensus mechanism will bring many changes to this blockchain ecosystem, such as the elimination and migration of miners and computing power, the decrease in ETH inflation rate, the rise of the staking ecosystem, and the potential emergence of Ethereum forks.

4: What impact will the Merge have on ETH tokens?

To conclude, after Ethereum transitions to the PoS mechanism, the inflation rate will significantly decrease, potentially entering a deflationary state. For the price of ETH, a reduction in supply may serve as a strong support and boost.

From a data perspective, Ethereum's annual supply is about 5.5 million tokens. Since the Ethereum London upgrade on August 5, 2021, over 2.5 million ETH have been burned in one year, and according to current staking data from the Ethereum Beacon Chain, approximately 600,000 new ETH will be added each year after the Merge. This means that the annual inflation rate of ETH is expected to drop to around -1.6%.

Using Bitcoin halving as a comparison, after the Merge, Ethereum will have effectively experienced three halvings.

5: When will the Ethereum Merge take place?

Although the Merge has been delayed multiple times, given the current situation, the Merge in September is imminent, expected to occur around September 15.

On August 12, Vitalik announced on Twitter that the TTD for the Ethereum mainnet Merge has been set, and the bordel.wtf website predicts that the Merge will happen around September 15, but the exact date depends on the hash rate.

The Ethereum Foundation also stated that consensus was reached on the parameters for the mainnet Merge during a community conference call, but due to the difficulty of PoW, it is challenging to estimate the exact timing of the Merge. The target date is September 15, 2022, but this estimate may have a deviation of up to a week.

6: What is the Ethereum fork that everyone is talking about?

For a blockchain, a hard fork is generally a normal upgrade, usually a planned update in the roadmap, falling within the realm of consensus. However, sometimes some hard forks do not maintain consensus, leading to the creation of multiple blockchains due to community splits, such as in 2016 when Ethereum split into Ethereum and Ethereum Classic due to the DAO hack incident.

The recent community discussions about the Ethereum fork refer to the fact that as Ethereum is about to merge and transition to the PoS mechanism, Ethereum miners will no longer be able to continue mining. Therefore, related interest groups may choose to continue maintaining the Ethereum PoW chain, which could result in multiple forked chains due to differing interests.

7: What impact will the Ethereum fork have on users?

For ordinary users, the Ethereum fork may not be a bad thing, as there will be forked chain airdrops (fork tokens) available to claim. On August 17, BitKeep officially announced that it will support the integration of Ethereum fork chains and will launch new product features to facilitate users in claiming and trading fork tokens.

8: How to participate in the hot topics of the Ethereum Merge and Forks?

For users, the most direct and relevant way to participate is to claim fork tokens on-chain. As mentioned above, BitKeep will launch new product features to facilitate users in claiming and trading fork tokens. However, the prerequisite is to transfer ETH or other ERC20 assets from exchanges or other chains to the Ethereum main chain in advance.

Additionally, feel free to follow BitKeep's official blog (https://blog.bitkeep.io/zh/?p=1245) and the special articles on "Ethereum Merge and Forks," where more information related to "Ethereum Merge and Forks" and detailed tutorials on "claiming fork tokens" will be available in the future.