Let's keep this thread love rolling.
With the Ethereum merge potentially around the corner (hopeful but not holding my breath), I thought it would be a good time to cover some common misconceptions about the merge itself.
@Crypto Texan tweeted a great thread about just that:
Misconception 1. The Merge will reduce gas fees
- FALSE. The Merge changes the consensus mechanism, and does not expand network capacity.
- Gas fees are a product of network demand relative to the capacity of the network.
- Efforts are being focused on scaling user activity at layer 2.
Misconception 2. Running a node requires staking 32 ETH
- FALSE. anyone can sync their own self-verified copy of Ethereum (i.e. run a node).
- No ETH is required. not before the merge, not after the merge.
- There are two types of Ethereum nodes: nodes that can propose blocks and nodes that don't.
Misconception 3. Transactions will be noticeably faster after The Merge
- FALSE. Though some slight changes exist, transaction speed will mostly remain the same.
- Transaction speed can mean time to be included in a block or time to finalization. both change slightly, but not in a noticeable way.
Misconception 4. You can withdraw staked ETH after The Merge
- FALSE. Staking withdrawals are not yet enabled with the merge. The Shanghai upgrade will enable withdrawals.
- Staked ETH, rewards, & newly issued ETH immediately after the merge will still be locked without the ability to withdraw.
Misconception 5. Validators don't receive any liquid ETH till the Shanghai upgrade
- FALSE. Fee tips will be credited to a validator's controlled Mainnet account, available immediately.
- Withdrawals on the other hand wont be available until the Shanghai upgrade.
Misconception 6. When withdrawals are enabled, stakers will all exit at once
- FALSE. Validator exits are rate limited for security reasons.
- Only six validators may exit per epoch (every 6.4 minutes, so 1,350 per day, or only ~43,200 ETH per day out of over 10 million ETH staked).
Misconception 7. Staking APR is expected to triple after The Merge
- FALSE. Recent estimations predict closer to a 50% increase in APR post-merge, not 200%.
- This comes from a reallocation of transaction fees that will start going to validators instead of miners.
- Not an increase in ETH issuance.
Misconception 8. The Merge will result in downtime of the chain
- FALSE. The Merge upgrade is designed to transition to proof-of-stake with zero downtime.
- An immense amount of work has been put into making sure the transition to proof-of-stake does not disrupt the network or its users.
So why is this merge hyped so damn much again?
The main reason is the change to the energy consumption by going from proof of work to proof of stake.
Proof of stake uses significantly less energy than proof of work and many institutional investors are looking for ESG ("Environmental, Social, and Governance") friendly solutions.
You can read about the pros and cons of proof of work versus proof of stake in my free eBook, Pondering Bitcoin Critiques.
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