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Academy Industry Analysis Article

7 common misconceptions about Ethereum’s Merge

2022.07.27 Adam James

Misconceptions around “The Merge” — Ethereum’s network switch from energy-intensive proof-of-work to environmentally friendly proof-of-stake — are rampant. From social media to mainstream media, there are a lot of things people are simply getting wrong about the proverbial Ethereum 2.0 ahead of its planned implementation later in 2022.

Here are seven of the most common false beliefs about The Merge.

Ethereum transaction fees will be lower

False!

Many people believe that Ethereum’s transition to proof-of-stake will lower the sometimes-notoriously high gas present on the network — which appears during times of congestion. 

However, The Merge will not actually change the throughput of the Ethereum network — meaning whoever pays higher fees will still see their transactions included in the network’s limited block space first. No network-capacity increases here!

Ethereum transactions will be faster

False!

Though there will be slight changes to transaction speeds — specifically, block inclusion and finalization speeds — you’re not going to notice the difference. For all intents and purposes, users’ experiences on Ethereum in regard to checking Etherscan for that first confirmation will remain relatively unchanged.

Ethereum isn’t particularly slow, anyways — provided you pay the appropriate gas fees in relation to current network usage at any given time.

Running an Ethereum node will require 32 ETH

False!

Running an Ethereum node actually doesn’t cost any ETH. Anyone can sync their own self-verified copy of the Ethereum blockchain — both pre-Merge and post-Merge.

The confusion here stems from the also-false belief that you need a minimum of 32 ETH to stake in post-Merge Ethereum — a requirement easily avoided by using a staking pool, such as the one offered by OKX.

ETH staking APR will increase dramatically post-Merge

False! (Kinda.)

A lot of talk has circulated that the APR for staking ETH will triple after The Merge. However, the current estimates are a little more modest at around a 50% increase from current levels.

The APR boost will come from transaction fees moving from miners to validators. (Though it is another common misconception that the APR increase will stem from an increase in ETH issuance.)

Ethereum will experience downtime during The Merge

False!

There exists a common belief that the Ethereum blockchain will experience downtime during its transition from proof-of-work to proof-of-stake — but this isn’t the case. In fact, one of the reasons why The Merge is taking so long to implement on the Ethereum mainnet is due to a massive amount of work testing and implementing it on testnets.

In reality, Ethereum will experience no downtime during The Merge — barring some unforeseen problem, of course.

ETH stakers will all dump their coins at once

False!

Even if they want to, ETH stakers could not all dump their coins at the same time.

The main reason why not everyone will be able to withdraw their staked ETH at will is that validators will be rate-limited to ensure the security of the Ethereum blockchain. 

Currently, there is more than 10 million ETH staked — but only around 43,200 ETH will be able to exit per day.

There will be a new ETH2 coin

False!

Though post-Merge Ethereum was originally referred to as Ethereum 2.0 or Eth2, this labeling has since been phased out in favor of simply keeping it all “Ethereum.” However, the old names have stuck around — perpetuating a false belief that there will be a new ETH2 coin.

There won’t be an ETH2 — so don’t fall victim to any scams!

Interested in no-hassle ETH staking ahead of The Merge? Head on over to OKX and join our ETH staking pool!

Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.

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