The Ethereum Foundation has clarified that the network’s upcoming proof-of-stake (PoS) transitory upgrade, known as The Merge, would not lower gas fees.
Energy-intensive mining will be unnecessary after the transition, which aims to bring together the current Ethereum mainnet execution layer with its future PoS consensus layer, the Beacon Chain.
ETH devs gear up for The Merge
The complete switch to PoS will occur in the third or last quarter of 2022.
“Gas fees are a product of network demand relative to the network’s capacity,” the Ethereum Foundation wrote. “The Merge deprecates the use of proof-of-work, transitioning to proof-of-stake for consensus, but does not significantly change any parameters that directly influence network capacity or throughput.”
While many investors and traders have purchased Ether in preparation of the upgrade, others appear to have done so under the mistaken belief that the network’s capacity will increase once the upgrade is implemented.
To begin, anyone can sync their own self-verified copy of Ethereum or run a node, with no upfront Ether staking required. Regarding staking, members cannot withdraw staked Ethern until the subsequent Shanghai update becomes live. However, liquid ETH rewards in the form of fee tips will be immediately available. In addition, validator withdrawals will be rate-limited once they go live to avoid a liquidity crisis.
Optimism for upcoming upgrade
After the upgrade, transactions won’t go any faster either. To attract capital, the network’s APR returns are anticipated to grow by 50% after the integration. The changeover is now being worked on in order to meet an earlier deadline of Sept. 15.
The success of the various testnet mergers may be a promising sign that the Ethereum mainnet will smoothly transition to PoS consensus next month, though the precise date is still susceptible to change.