The Merge integrated Ethereum’s original execution layer with its new proof-of-stake consensus layer, completing the network’s shift to proof-of-stake consensus.
Ethereum’s consensus layer, formerly Ethereum 2.0, has now fully integrated with the original blockchain (execution layer). The Merge was completed on September 15, 2022, marking the shift of the Ethereum network from proof-of-work (PoW) to proof-of-stake (PoS). According to the network, Merge reduced Ethereum’s energy usage by around 99.95%.
One of the primary concerns about the Merge is centralization. Another possible issue is the chance of fraud, as the general people may be unaware of how the Merge operates. The Merge has a basic issue: it will likely enhance the concentration of power within the network. The greater the value of a staker’s position, the greater the incentive for verifying blocks. As a result, a small number of wealthy individuals or groups may hold the bulk of the stake and have disproportionate influence over the network.
Sixteen significant corporations own 64% of the network. In the case of a fork, these groups might band together to decide which chain to support, perhaps censoring transactions or spending cash twice. Critics are already questioning if the Merge is a “rich get richer” scheme designed to perpetuate the influence of current interests.
Those who cannot afford to stake to earn interest on their ETH holdings may be priced out of the market. Because only people with vast sums of money would be able to engage in staking, this might lead to further centralization.
It’s also not unusual for fraudsters to take advantage of significant transitions like The Merge, claiming that users must do something (typically requiring the exchange of tokens) to upgrade. Users may be misled into installing malicious software as an official update while upgrading their wallets.
Finally, miners who have been mining on Ethereum’s Mainnet for years may still choose to continue mining on Ethereum’s old chain. After all, many of these miners have indeed spent significant power and hardware costs, and they may believe they have more to gain by remaining with the tried-and-true Mainnet.
This might cause a split in the community, with two rival versions of Ethereum running at the same time. While this eventuality is uncommon, investors should be aware of it.