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What Is the Ethereum Merge?

The Ethereum Merge was a major network upgrade in September 2022, where Ethereum transitioned its consensus mechanism from Proof of Work (PoW) to Proof of Stake (PoS). This event unified the “execution layer,” which handles transactions and smart contracts, with the “Beacon Chain,” responsible for PoS consensus.

Proof of Work (PoW) can be understood as using computational power to solve complex puzzles for block validation—similar to large mining farms competing in calculations. Proof of Stake (PoS), on the other hand, involves staking ETH to participate in voting and block validation, akin to using funds as “collateral” to earn rights for block production and verification. The Merge marks the handover between these two mechanisms.

Why Did the Ethereum Merge Happen?

The primary motivations behind the Merge were to improve sustainability, security, and scalability. PoW requires high energy consumption and expensive hardware, while PoS dramatically reduces energy usage and makes it easier to implement future upgrades such as sharding and more flexible scaling strategies.

Additionally, the Merge redefined ETH’s issuance and reward structure, allowing validators to earn yields through staking and laying the groundwork for future upgrades in throughput and data availability, including enhancements geared toward Layer 2 solutions.

How Does the Ethereum Merge Work?

The Merge integrates the transaction and contract execution layer into the pre-existing Beacon Chain consensus, making the latter the “referee” for the entire network. From this point on, blocks are produced and confirmed by validators under PoS instead of miners using PoW.

This is similar to switching a running car’s engine from gasoline to electric without changing its body or the road. Users and developers continue using the same addresses, contracts, and tools, but the underlying “engine” now relies on PoS-based validation and ordering.

How Does the Ethereum Merge Affect Gas Fees and Energy Consumption?

The Merge does not directly reduce gas fees. Gas fees are primarily determined by block space supply and demand, so short-term costs still depend on network congestion; lowering fees mainly relies on Layer 2 solutions and future protocol upgrades.

In terms of energy consumption, the Merge resulted in a drastic reduction. According to official disclosures, switching to PoS decreased overall energy usage by approximately 99.95% (source: Ethereum Foundation, post-Merge 2022). This significantly improves Ethereum’s environmental sustainability.

What Changes Does the Ethereum Merge Bring to User Experience?

For regular users, sending transactions and interacting with DApps remains unchanged—addresses, contracts, and wallets all function as before. The difference is that block production and security now come from validators rather than miners, with new mechanisms for network finality and penalties.

For ETH holders, new participation methods like staking and restaking have been introduced. For developers, the toolchain is largely compatible, but attention is needed for block finality, validator interfaces, and how upcoming upgrades may affect data availability.

How to Participate in Staking After the Ethereum Merge?

There are three common ways to stake ETH: running your own validator node, delegating through service providers, or utilizing liquid staking solutions.

Step 1: Assess your financial and technical capacity. Operating a validator usually requires 32 ETH and maintaining an online node; most users may find service providers or exchanges more accessible.

Step 2: Choose a trusted platform. Gate offers staking products that relieve you from node maintenance; alternatively, liquid staking protocols provide tokens representing your staked share, which can be traded or used in DeFi.

Step 3: Understand rewards and risks. Staking yields come from block rewards and ordering fees, with returns depending on total staked volume and network activity. Be aware of slashing risks (penalties for misconduct or offline behavior that may result in loss of staked funds) as well as price volatility.

What Is the Relationship Between the Ethereum Merge and Sharding?

The Ethereum Merge is like swapping out the “engine” before widening the “road.” The Merge switched consensus to PoS; sharding focuses on boosting data availability and throughput, providing cheaper “bandwidth” for high transaction volumes and Layer 2 scaling solutions.

Currently, Layer 2 technologies (such as Rollups) drive scalability; once sharding is implemented, the cost for Layer 2s to access and publish data will drop, raising overall throughput. The Merge provides the essential consensus foundation for this roadmap.

What Are the Risks and Misconceptions Around the Ethereum Merge?

A common misconception is that “the Ethereum Merge will immediately make gas fees cheaper.” In reality, costs depend more on scaling solutions and Layer 2 adoption. Another misconception is “ETH will be massively unlocked and dumped post-Merge.” The Merge itself does not enable withdrawal of staked funds; withdrawals require subsequent upgrades.

Risks include slashing and operational risks for validators, as well as potential price discrepancies between liquid staking tokens and native ETH. Before participating, fully understand protocol rules, choose reputable services, and pay close attention to fund security.

How Does the Ethereum Merge Affect ETH Supply and Network Security?

Regarding supply, miner rewards were eliminated after the Merge, slowing new ETH issuance. Additionally, a portion of transaction fees continues to be burned on-chain (EIP-1559). As of 2025, overall ETH supply fluctuates between low inflation and slight deflation depending on network activity and burn rates.

For security, PoS binds “malicious action costs” and “slashed capital” directly to validator assets; attackers must hold significant ETH and risk being slashed. Network security no longer depends on energy consumption but rather on capital staked and protocol penalty mechanisms.

Key Takeaways from the Ethereum Merge

The Ethereum Merge switched consensus from PoW to PoS and unified the execution layer with the Beacon Chain—drastically reducing energy consumption but not directly lowering gas fees. It transformed ETH’s issuance structure and security model, ushered in a new era of staking and penalties, and paved the way for sharding and Layer 2 scalability. For users and developers, usage remains largely unchanged but offers more diverse ways to participate in network building. When staking, select trusted channels (such as Gate’s products), thoroughly understand rewards, slashing risks, and price volatility—and always manage funds prudently.

FAQ

How Is a Blockchain Merge Different from a Traditional Company Merger?

A blockchain merge refers to integrating two independent chains—most notably Ethereum’s switch from Proof of Work to Proof of Stake. Unlike corporate mergers or acquisitions, a blockchain merge is more like a technology upgrade: it does not involve changes in ownership or corporate governance restructuring. User assets and accounts remain continuous before and after the merge; only the underlying operational mechanism changes.

Will My Crypto Assets Be Affected During a Chain Merge?

No. The merge is an upgrade at the blockchain protocol level—your wallet address, tokens held, and private keys remain unchanged. Just as your bank account remains intact after a banking system upgrade, a merge only changes how the network operates without impacting asset ownership. Note that there may be brief congestion or delays around the merge event; it is advisable to conduct important transactions during stable periods.

Why Do Blockchains Undergo Merges?

Merges typically address network efficiency, cost reduction, or environmental issues. The Ethereum Merge transitioned from Proof of Work to Proof of Stake primarily to reduce energy consumption, lower gas fees, and improve transaction speed. This is a critical step in blockchain evolution—making networks more sustainable and suitable for mass adoption.

What Should I Do With My Crypto Assets at Gate Exchange After a Merge?

At Gate or similar exchanges, merges have minimal impact on user experience. No action is required; you can continue normal deposits, withdrawals, and trading. The exchange will automatically adapt backend systems to support the new protocol and ensure asset security. If you encounter deposit or withdrawal issues, contact Gate customer support for network status updates.

Do I Need to Take Action With My Tokens Before a Merge?

Typically no special action is needed. As long as your tokens are stored in wallets or platforms that support the network (such as Gate), merges occur automatically with assets fully preserved. However, it’s wise to be aware of scheduled merge times and avoid large transactions during those periods in case of volatility or delays. If assets are held in a personal wallet, ensure your private keys are backed up securely.