First, let's interpret what Ethereum 2.0 is. At thebeginning of its birth in 2014, Ethereum officially planned four stages for it,namely Frontier (frontier), Homestead (homeland), Metropolis (metropolis), andSerenity (quiet). The first three stages adopt the POW model, and the fourthstage, "Quiet", is the final form of Ethereum, which is what we oftencall Ethereum 2.0, which uses the POS mechanism.
So far, the first three stages of Ethereum have been completed, and the fourthstage of development work is underway. During this period, the conversion fromPOW to POS, as well as important upgrades such as sharding and replacing EVM byeWASM, will be completed. The performance of the workshop will be greatlyimproved. However, it is necessary for novice users to understand the mergerthat will take place in the second half of 2022 and the beacon chain that hasbeen launched in the second half of 2020.
In chronological order, we first say that the beacon chain is online. Simplyput, the Beacon Chain is considered the "command and control center"of the entire Ethereum 2.0 network. Beacon Chain is a brand-new proof-of-stake(POS) blockchain, which is designed to solve the consensus problem, while thepurpose of Shard Chains is to solve the scalability problem of Ethereum. Oneafter another, they solved the mechanism distribution of Ethereum and theshortcomings of the underlying performance.
The Ethereum merger is exactly the key point in the middle.
It is worth noting that after the beacon chain was launched in December 2020,the process of generating blocks at the execution layer is still carried out bythe original chain in the form of PoW, and Ethereum has entered a stage ofPOW+POS mixed mining. In addition, after the beacon chain goes online, thepledge function is enabled, and users can deposit their ETH on the Ethereum 2.0network, and become a verification node by locking at least 32 ETH toparticipate in verification transactions to ensure the security anddecentralization of the network. This replaces the physical miners and miningfarms under the POW mechanism. In return, stakers will be eligible to receiveETH rewards.
After introducing the beacon chain, let's look at the Ethereum merger. Mergemeans that Ethereum will merge the consensus layer (POS beacon chain) with theexecution layer (POW original chain), and stop the POW part of the originalchain. This upgrade represents the official switch of Ethereum to POSconsensus. The consensus layer can be simply understood as the core idea of the ecology, and the execution layer can beunderstood as the specific instructions of the ecology. When the two completelyturn to POS, it means that the era of Ethereum POW will really becomehistory.
It is worth noting that this merger will stop the POW verification of theoriginal chain, and will not unlock the ETH previously pledged to the beaconchain, which will be unlocked in the first hard fork after the merger. Thismeans that ETH that has not been issued by POS before unlocking can be releasedfor circulation, and the way of additional issuance through POW has alsostopped, and Ethereum has entered a stronger deflation. It can be seen that themerger ended the stage of POW+POS, allowing Ethereum to fully turn to POS.
Under the POS mechanism, the Ethereum revenue that miners can obtain will berelated to the proportion of their pledged ETH to the entire network’s ETHpledge, and it is no longer necessary to purchase hardware such as miningmachines. This means that Ethereum POW mining will be withdrawn from the stageof history soon, which also brings certain pressure to miners who are engagedin POW mining. Therefore, this Ethereum merger will bring fundamental changesto the entire mining industry. There are four specific manifestations. It canbe seen that in order to realize the initial positioning of "worldcomputer", Ethereum did not hesitate to offend all the miners withruthlessness, which is quite a bit like a strong man breaking his wrist. It isforeseeable that after switching to the POS mechanism, the Ethereum networkwill be more user-friendly in terms of revenue, because the relationshipbetween miners and users is essentially a game relationship. In addition, dueto the addition of the function of pledge mining and the transition to adeflationary economic model, the Ethereum ecosystem has actually increased thepath and space for users to generate income.
However, whether Ethereum 2.0 can truly realize the substantial optimization ofthe underlying network as it wishes, depends on the specific performance of thepost-merger stage — the launch of shards. At that time, we will also combinereal-time data and user feedback to make popular interpretations for noviceusers.