The Merge Explained: Ethereum’s Shift to Proof-of-Stake

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The Merge marks a pivotal moment in Ethereum’s evolution—the long-anticipated unification of the network’s current execution layer (the mainnet users interact with today) and the new proof-of-stake (PoS) consensus layer, known as the Beacon Chain. This transition eliminates energy-intensive mining, replacing it with a more sustainable model where validators secure the network by staking ETH. This upgrade brings Ethereum closer to its core vision: greater scalability, enhanced security, and long-term sustainability.

Initially launched in December 2020, the Beacon Chain operated independently from the mainnet. The Merge represents the final convergence of these two systems, permanently retiring proof-of-work (PoW) in favor of PoS. After this transition, the Beacon Chain becomes the consensus engine for all network data—including transaction history and account balances—ensuring continuity and integrity across the entire blockchain.

What Happens During the Merge?

At its core, The Merge integrates Ethereum’s existing transactional history with the PoS mechanism. Once complete:

This means that instead of relying on computational power, Ethereum will now rely on economic incentives and penalties to maintain consensus. Validators are responsible for proposing and attesting to new blocks, ensuring transaction validity and network integrity.

👉 Discover how staking works in a post-Merge world

Who Needs to Prepare?

For Users and ETH Holders

You don’t need to take any action to protect your funds during The Merge. Whether you hold ETH or other digital assets on Ethereum—or participate in staking without running a node—your wallet remains unaffected. Funds held before The Merge will remain accessible afterward. No upgrades or migrations are required.

However, be cautious of scams during this transition. Fraudsters may attempt to trick users into sending ETH to fake “upgrade” portals or claim there’s a new “ETH2” token. Remember: there is no ETH2 token. After The Merge, there is only one Ethereum blockchain.

For Node Operators and dApp Developers

Staking Node Operators and Providers

  1. Run both a consensus layer client and an execution layer client simultaneously.
  2. Use a shared JWT token to authenticate communication between clients.
  3. Set up a fee recipient address to receive transaction fee rewards and MEV (Maximal Extractable Value).

Non-Validating Node Operators & Infrastructure Providers

  1. Install both consensus and execution layer clients.
  2. Authenticate both clients using a shared JWT for secure inter-client communication.

dApp and Smart Contract Developers

The Merge introduces changes that may affect your applications:

Ensure your dApps handle these shifts gracefully, especially around block finality and time-dependent logic.

When Did The Merge Happen?

The Merge was successfully completed in September 2022, marking a historic shift in blockchain technology. There is no future date to anticipate—this transformation has already taken place.

8 Common Misconceptions About The Merge – Busted

Myth 1: "You Need 32 ETH to Run a Node"

False.
Anyone can run a non-validating Ethereum node for free. Only validators who propose blocks are required to stake 32 ETH. The vast majority of nodes contribute to network resilience without any financial commitment.

Myth 2: "Gas Fees Will Drop After The Merge"

False.
The Merge changed the consensus mechanism but did not increase network capacity. Therefore, Gas fees are not expected to decrease as a direct result. Scalability improvements are being driven by Layer 2 solutions like rollups.

👉 Explore Layer 2 scaling innovations shaping Ethereum’s future

Myth 3: "Transactions Will Be Much Faster After The Merge"

False.
While block production is now more consistent at one every 12 seconds, transaction speed on Layer 1 remains largely unchanged. The ~10% increase in block frequency is minor and unlikely to be noticeable to most users.

Myth 4: "You Can Withdraw Staked ETH Right After The Merge"

False.
The Merge did not enable staking withdrawals. That functionality came later with the Shanghai upgrade, which activated in April 2023. Until then, staked ETH and accrued rewards remained locked.

Myth 5: "Validators Won’t Receive Any Spendable Rewards Until Withdrawals Are Enabled"

False.
While staked principal and accumulated staking rewards were locked until Shanghai, transaction tips and MEV rewards were immediately available in validators’ execution layer wallets. This means active validators could still earn usable income pre-withdrawals.

Myth 6: "All Stakers Will Exit Immediately After Withdrawals Launch"

False.
To prevent sudden network destabilization, exit rates are capped. Only 6 validators per epoch (about 1,350 per day) can fully withdraw, equating to roughly 43,200 ETH daily—even with over 10 million ETH staked. Excess balances above 32 ETH are incentivized to withdraw since they don’t boost returns.

Myth 7: "APR for Staking Will Triple After The Merge"

False.
While staking yields increased post-Merge due to reduced issuance and growing fee capture, estimates suggested a rise of around 50%, not 200%. Actual APR depends on total staked supply and network activity.

Myth 8: "The Merge Will Cause Downtime"

False.
The upgrade was designed for zero downtime. The transition from PoW to PoS occurred seamlessly, with no service interruption for users or applications.

What Happened to “Eth2”?

The term “Eth2” has been deprecated. With the completion of The Merge, there is now only one Ethereum network. To reduce confusion:

This unified terminology reflects Ethereum’s streamlined architecture moving forward.

How Do Upgrades Relate to Each Other?

The Merge & the Beacon Chain

The Merge finalized the Beacon Chain’s role as Ethereum’s consensus backbone. Validators began securing the mainnet, rendering mining obsolete. This laid the foundation for future upgrades like sharding and improved scalability.

The Merge & Shanghai Upgrade

For focus and stability, The Merge excluded staking withdrawals. These were introduced later via the Shanghai upgrade, allowing validators to exit and withdraw rewards—a critical step for full staking flexibility.

The Merge & Sharding

Originally, sharding was meant to precede The Merge. But with rapid advancements in Layer 2 rollups, priorities shifted. Now, sharding aims to offload data storage from rollups by distributing compressed transaction data across the network—greatly increasing capacity. However, this advancement depends on first achieving full PoS consensus through The Merge.

Frequently Asked Questions (FAQ)

Q: Is my ETH safe after The Merge?
A: Yes. Your funds are fully secure. No action was required from users during or after the transition.

Q: Can I still mine Ethereum after The Merge?
A: No. Proof-of-work mining ended permanently with The Merge. Ethereum now runs entirely on proof-of-stake.

Q: Does The Merge make Ethereum more environmentally friendly?
A: Absolutely. Energy consumption dropped by over 99.9%, making Ethereum vastly more sustainable.

Q: When did staking withdrawals become possible?
A: With the Shanghai upgrade in April 2023, stakers gained the ability to withdraw both rewards and principal.

Q: Will future upgrades make Ethereum faster or cheaper?
A: Yes—future updates like EIP-4844 (Proto-Danksharding) and full sharding aim to drastically reduce costs and boost throughput via Layer 2 integration.

Q: Can I start staking with less than 32 ETH?
A: Yes—through liquid staking protocols like Lido or Rocket Pool, you can stake smaller amounts and receive staking derivatives (e.g., stETH).

👉 Learn how you can start staking with flexible options today