Popular Opinion #1: The merge will make Ethereum deflationary.
The transition from PoW to PoS is set to decrease the issuance of ether by ~90%.
Against the backdrop of burning mechanisms, this move stands to drastically increase Ethereum’s deflation.
The merge might get the glory, but the workhorse is EIP-1559.
In August last year, the London hard fork introduced burning, which effectively destroys a portion of eth used in every transaction.
TRUE. The combination of an augmented issuance mechanism coupled with EIP-1559’s burning function does look to increase Ethereum’s deflationary trajectory. With less supply, comes greater demand… and hopefully higher prices.
Popular Opinion #2: Ethereum miners will soon be out of a job.
It’s no secret the biggest news of the merge is its transition from PoW to PoS. As a result of this, mining may soon be a thing of the past for the world’s biggest smart contract blockchain network.
Miners earn Ethereum emissions as rewards for processing transactions. The merge replaces the need for massive computing power with the need for large stores of ETH to be held as collateral for the right to earn ether as rewards for participation.
This will eliminate Ethereum’s reliance on processing power, putting miners out of a job and, unfortunately for them, there aren’t a lot of openings on other networks. In fact, the vast majority of miners intend on either exiting the industry or transitioning to data center services.
TRUE. Miners have seen this coming. It’s no surprise, and there’s a substantial chance the savviest operations have already begun implementing exit strategies. Miners sell ETH to pay for operational costs. Since their overhead is disappearing, holding any remaining ETH seems just as likely as selling.
Popular Opinion 3: The Merge will complete Ethereum’s network upgrades.
It’s true that the merge is the most anticipated upgrade of the Ethereum network, but it will remain far from complete for years after the imminent upgrade. In fact, Ethereum founder Vitalik Buterin himself has said, “Ethereum can go up to being 55% complete after the ‘merge’.”There are actually five stages to Ethereum’s developmental roadmap:
The Merge: This is the one we’re all waiting on which will transition Ethereum’s consensus mechanism from proof of work to proof of stake.
The Surge: This phase will bring sharding to the Ethereum blockchain. Sharding will divide the network into separate partitions to spread out the workload. It’s currently planned for 2023.
The Verge: Data storage mechanisms will be upgraded by augmenting Merkle proofs, further advancing Ethereum’s scalability.
The Purge: The fourth phase will reduce the hard drive space required for validators, making it easier to participate in securing the network,
And finally…The Splurge: You can’t make this stuff up. This includes a series of miscellaneous upgrades to tie up any loose ends the previous four stages left unaddressed.
FALSE. The merge is really only the beginning of Ethereum’s evolution toward a brand new blockchain. Transitioning from PoW to PoS is a major achievement, but sharding could be the real game-changer for users since it stands the best chance of making the greatest impact on throughput.
