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Ethereum Merge: What Happens to Your ETH and the Network's Future

Discover the implications of Ethereum's transition to Proof-of-Stake, including what happens to your ETH, staking updates, and the network's future roadmap.
Published on 2022-09-03

Ethereum Merge: What Happens to Your ETH and the Network's Future

Ethereum is on the brink of its historic transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) through an event known as The Merge. This transition will combine the current Ethereum mainnet with the Beacon Chain, marking a significant milestone in the network's evolution.

What Happens to Your ETH After the Merge?

  • Holders on Exchanges: If your ETH is held on supported exchanges, it will automatically transition to the new PoS network without any action required. Your funds will remain safe and accessible post-Merge.
  • No ETH 2.0 Token: There is no new "ETH 2.0" token. Beware of scams suggesting otherwise. Exchanges may use an "ETH2" ticker, but this is not an official upgrade.

Staked ETH: What You Need to Know

  • Locked Staked ETH: Staked ETH (often referred to as ETH2) will remain locked and unavailable for trading or transfer until early 2023, pending further protocol upgrades.
  • Staker Requirements: Stakers must run both a consensus layer client and an execution layer client post-Merge. Authentication via a shared JWT secret and setting a fee recipient address are also necessary to maintain node functionality.

Ethereum's Future Post-Merge

  • Triple Halving: The Merge will drastically reduce ETH's inflation rate from 4.3% to 0.43%, comparable to three Bitcoin halvings. Daily block rewards will also decrease significantly.
  • Four Phases of Development: Post-Merge, Ethereum will undergo four phases—Surge, Verge, Purge, and Splurge—aimed at enhancing scalability and security. By the final phase, Ethereum could process up to 100,000 transactions per second.

Impact on ETH Price and Market Volatility

  • Volatility Expected: Analysts predict heightened market volatility around the Merge, affecting not only ETH but the broader crypto market.
  • Positive Outlook: The reduction in inflation could positively impact ETH's price, with predictions suggesting it could rally to $5,000 post-Merge.

Hard Forks and Miner Reactions

  • PoW Hard Forks: Some miner groups plan to hard fork the Ethereum blockchain to maintain a PoW version, creating alternative networks.

Why You Should Care

The Merge marks a significant step toward a more sustainable, scalable, and eco-friendly Ethereum. For most ETH holders, no action is required, but staying vigilant against scams and understanding the network's future is crucial.

For more insights, continue reading on DailyCoin.

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