The Merge: what it is, how it affects those who have ethereum and how to prepare

Etherealthe blockchain network that creates the second cryptocurrency among those with the largest market capitalization, will go through one of the most important evolution processes in the crypto world since its existence. “The fusion”as it was called, it will imply reforms regarding how transactions are carried out, applications are created, smart contracts are issued and ETHs are generated. The changes aim to make the network cheaper, more scalable and more environmentally friendly.

These transformations will occur in stages between September 6 and 20. One of the most important novelties has to do with the passage of a protocol Proof of work (PoW) a proof of stake. “Currently, each operation in the network – suppose, the sending of an amount of ether from one person to another in one of the job portals that pay with cryptocurrencies – requires the participation and consensus of distributed nodes (computing units). , which certify and record the transaction in a block chain using mathematical exercises and a lot of computational power”, explains the main cryptocurrency exchange, Binance.

This “consensus form” is the one used by, for example, bitcoin. Instead, as of “The Merge”, ethereum will stop “undermine” and there will begin to be “validators” in charge of registering operations. Advances have shown that this system consumes less electrical energy – and therefore reduces the carbon footprint – and is superior in terms of preventing hacking, fraud or duplication. In addition, it encourages decentralization of the system, an objective of special relevance for the crypto world.

Vitalik Buterin, founder of ethereum, and Evan van Ness, specialistFabrizio Obljubek

This change will involve a more scalable. “The consensus protocol that Ethereum is about to adopt promises faster transactions and more agile processes. It will be easier for the network to summon the vast participation of validators compared to the current effort that involves integrating more and more miners; this will have to be reflected in the growth of the network and its uses, ”explains Binance on his portal.

Major exchanges expect to make announcements about how “The Merge” will impact the various products on the network after the process occurs. This is because some of the consequences of the merger are unknownor they could lead to different results.

Ethereum could split into of the different networkssomething known as a “fork”. In that case, ETH (the acronym that currently identifies the network’s tokens) will refer to the new chain. That token, however, will have to go through a listing process to be published on some platforms.

According to the Ethereum team, any hard forks during The Merge will be unofficial. If an “unofficial” fork occurs, Binance will release more details about the token distribution in a future announcement.

Some operations will be suspended during "the fusion"
Some operations will be suspended during “The Merge”shutter

After the update, it is very likely that the speed of the transactions will be similar to the current one. The changes will not be noticeable to the average user. Ethereum gas fees will remain the same for now, but opens the possibility that they will be cheaper in the future.

Instead of miners, people who stake Ethereum will help protect the network. Stakers will not be able to withdraw their staked Ethereum for six to 12 months after “The Merge.”

In principle, the holders and users of the Ethereum network they should not do anything although they must be alert to the suspension of some services in the network until the merger occurs.

Binance will suspend the deposits and withdrawals of the records ETH and ERC-20 approximately on September 6, 2022 at 2:00 p.m. (Argentine time) for the update of the Bellatrix consensus layer and on September 15, 2022 at 3:00 a.m. for the layer update of execution Paris”, they reported. They warned users to leave a sufficient margin of time so that the transfers of their records processed prior to suspension.

If you don’t create a new symbolic, Binance will then reopen ETH and ERC-20 token deposits and withdrawals “as soon as possible.” On the other hand, if you split into two opposing strings and create a new symbolic, the users of the platform will see accredited the symbolic to arise in a 1:1 ratio according to the snapshot of ETH balances before the Paris execution layer update.

The Ethereum network will change a Proof of Stake
The Ethereum network will change a Proof of StakeFile, Archive

“For the purpose of protect Binance users, all the records that arise will undergo a strict review process to be included in lists, just as Binance does with any other coin or symbolic. Due to internal policy, Binance does not guarantee listings,” they reported.

The trade in placemargin and futures they will not be affected, although great price volatility is expected. Binance will suspend ETH cross and isolated margin lending requests from September 14, 2022 at 3:00 until approximately September 16, 2022 at 3:00.

Liquidations will continue to be enabled under extreme conditions of price volatility. Binance reserved the right to update the suspension time for ETH cross and isolated margin lending and to adjust ETH lending interest rates, with or without notice. In addition, users with obligations in ETH must return the token that arises from the fork in the case of scenario B.

Work testthe algorithm currently used by bitcoin and from which ethereum will migrate has some disadvantages, such as the consumption of electrical energy. Hereinafter, the tokens will not be mined, but there will be validators in charge of registering operations in the blockchain, a more decentralized system.

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