Success of ETH merger: when does deflation work? Is there any big risk behind it?

Today, not only in the field of encryption, but also in the fields of finance and technology are paying attention to a major event. Yes, Ethereum is merged.
The news just came that Ethereum had completed the long-awaited merger at the block height of 15537393 (around 14:42 Beijing time on September 15). Previously, the vernacular blockchain has done a lot of detailed science popularization on the merger of Ethereum: the merger is imminent, and you must know about the theme of the second half of Ethereum, Layer2. However, as a "hard core" event, the merger contains a lot of information. Everyone still said that there are still many questions, and deeply concerned about the progress after the merger of Ethereum. At the time of the merger of Ethereum,This article will analyze the problems that people pay more attention to, such as deflation, centralization, risk and so on, one by one in simple terms

Will Ethereum be able to "speed up and reduce fees" after the merger?
If not, why bother to merge?

Not yet.
In short,This upgrade of Ethereum is mainly a combination of the "executive layer and consensus layer", which makes it clear that the biggest change is to switch from POW to POS, reducing the cost of energy consumption, verification and blocking to a low and controllable position.However, the problem of "low speed and high cost" that has plagued the ecology of Ethereum has not been solved yet. I can only say one mouthful of foodThe merger can be said to be the stepping stone for the large-scale expansion of Ethereum,With this foundation, many technical teams behind the Ethereum community can then free up their hands to focus on Layer2 and sharding on the roadmap. It is known that the Rollup costs of Layer2 and other issues can be optimized soon. Finally, it will be a long time for the ETH2.0 (high-speed, low-cost) network to be fully implemented, and the roadmap may be adjusted at any time due to new progress.

After the merger of Ethereum, more than 10 million ETHs will unlock the smash?

No, even if you unlock it, you can't sell it in large quantities.
After the merger of Ethereum, the ETH of POS pledge was not immediately unlocked, and the real opening and unlocking circulation time is expected to be 2023.In addition, many people worry that a large number of ETH unlocks will lead to a large number of selling and smashing, which theoretically does not existBecause POS pledged withdrawals will not be available immediately, in short, there is a ceiling on withdrawals per unit time and you need to queue for unlocking, so there will not be a large number of unlocked ETHs in the market at the same time.

After the merger of Ethereum, where did all the computing power go?

Multiple selections.
According to the observation of the vernacular blockchain, there are a large number of Ethereum block producers. Previously, they mainly used video cards and ASIC devices to "dig" blocks. When POW is transferred to POS, they have the following options in front of them:

1. Salvage value of recycling equipment sold==Participation in other algorithm POW projects dominated by Bitcoin
(Reference article: Ethereum merger will divest 100 billion mining market, so what are the POW projects benefiting from it?)
2. Do not sell equipment==Continue to participate in the production of other POW project blocks with the same algorithm
3. No longer participate in POW and turn to POS pledge, or both
Of course, the vernacular blockchain believes that most of the Ethereum mine resources (including but not limited to: cheap electricity, sites, computer room facilities, etc.) can be quickly put on the shelf of Bitcoin equipment after off shelf Ethereum block production equipment, which may maximize the benefits. Therefore, we also see the rise of Bitcoin computing power.
In addition, some people mentioned the problem of "unemployment" of Ethereum producers. From the perspective of Ethereum's exit from the POW mechanism, these "jobs" do not need to be done, and they really belong to "unemployment",However, most of the early participants have already returned their capital. They are free to participate in new POWs or POS, or even prepare for the update trend of zero knowledge proof computingA small number of losers had to face a discount sale of video cards and other equipment to reduce losses.

After Ethereum turned to POS, it exposed a "serious" centralization problem?

A mountain out of a molehill.
In fact, the problem of node centralization is not so serious. Many media or KOL intentionally or unintentionally magnified the problem, causing panic among many people. They mainly pointed out that:There are two major problems: too many POS nodes are controlled by pledge service providers, and the share of pledge node service providers is too large (AWS, etc.).
Let's analyze them one by one. First, the problem of mine hegemony has long been commonplace, so we don't need to repeat it,If this is a huge problem, almost only Bitcoin produced in several mining pools will be sent to the guillotine long ago.Moreover, the share of POS pledge service is solvable, while the rules of POW are almost inexplicable. One is the decentralized pledge service scheme, and the other is the pledge service provider's commitment to the community's anti censorship (if not followed, the user will be transferred).
Another problem, similar to that of IDC service providers, is much simpler,The deployment of Ethereum 2.0 authentication nodes only requires a stable Internet infrastructure, and the threshold is very low. The main reason for deploying to large service providers such as AWS is service quality,Even if AWS cannot continue hosting due to policy issues, it does not mean that all the nodes are destroyed. To know that AWS nodes are distributed all over the world, just migrate nodes in different regions.
In addition, it is impossible to reach consensus on the policies and laws of more than 100 countries around the world,To take a simple example, IDC services in some countries, such as the Netherlands, are very loose, and even allow websites with infringing content, so this is never a problem. If we worry about AWS doing evil and pulling out network cables in a wide range, this problem is also very simple. Now it is 2022. AWS is also deployed as a distributed network service. It is almost difficult to stop the service of a wide range of customers due to a single point of power failure or pulling out network cables. Of course, even if this cannot be said that it will never happen, it is usually much more reliable than the infrastructure located in remote areas of POW.
In general, the word "serious" is not appropriate. The decentralized mechanism of POW and Ethereum POS can only be said to have its own merits. There is no need to make a fuss about it. Of course, the problem of "centralization" in the encryption field from both inside and outside is in the process of "continuous improvement".To put it simply, for example, pledge service providers with large shares like Coinbase and Lido can directly adopt the SSV scheme to provide users with decentralized pledge services to solve these problems.

The upgrading of Ethereum is complex and difficult, and there may be serious technical risks?

It is indeed very complex and difficult, but no major risk has been found yet.
At one time, some overseas mainstream media (outside the industry for encryption) also paid great attention to the Ethereum merger. Of course, for major upgrades,It is widely believed that the upgrading of Ethereum is difficult, complex, and prone to technical problems. After merging and transferring to POS, vulnerabilities may occur and failures may occur. Others believe that the POS mechanism has not been tested and may not be as stable as POW.
On this point, as an encryption participant in the industry, it should be clear that the strength of several technical teams behind Ethereum or the preciseness of past upgrades are among the top in the industry. After several rounds of testing on the test network, it is basically smooth and no unsolvable problems are found. It takes a long time from project establishment to technical breakthrough to test implementation, and the preparation is sufficient, From the statement of support from various ecological projects and the affirmation of technicians involved in the development of Ethereum,The industry is quite confident about the Ethereum POS consensus mechanism. In fact, as the beacon chain of the main network of Ethereum POS chain, it has also been running stably for a long time without any problems. After the merger, the POS link management should also be able to run stably.

After the merger, when did deflation officially begin? When will the effect appear?

Deflation has no time point, it is more a state.
When the number of destroyed shares per unit time is greater than the average number of additional shares, it can be said that Ethereum has been deflationary during this period. Recently, Banteg, the core developer of Yearn, said on Twitter that the base fee of Ethereum reached 15.43Gwei, which is the threshold for ETH supply to become deflationary after the merger. To put it simply, when Ethereum reaches this threshold, the number of ETHs destroyed through EIP1559 will exceed the number of additional POS offerings, reaching a deflationary state. Of course, under the influence of ecological activity, the gas fee of Ethereum has been floating, and the POS issuance rate will also fluctuate depending on the proportion of pledged ETH,Therefore, Ethereum will not be deflationary all the time under normal circumstances, but a substantial reduction in production is a certainty.
Referring to the experience of halving Bitcoin, the impact on market supply and demand was not significant at the beginning of halving, and the trend began to become strong after it began to accumulate. Therefore, the substantial production reduction or deflation of Ethereum may not be effective at the beginning, but it will gradually emerge after a period of time.