Golden Observation | Post Merger Era: Will Ethereum surpass BTC?

"The Ethereum merger is complete! This is an important moment for the Ethereum ecosystem. Everyone who helps to achieve the merger should be very proud." After the completion of the merger of the major milestones of Ethereum, the founder Vitalik Buterin (V God) sent a message to celebrate on the social platform.

At 2:45 p.m. on September 15, the long-awaited "The Merge" of Ethereum was completed, and the transition from PoW to PoS was complete. What will happen to Ethereum after this?

Next station of the route map

The encryption lending platform Nexo said that the new PoS consensus mechanism has no direct relationship with network capacity. Fees, whether gas fees or NFT coins, will not be affected, at least in the short term. However, it is important to note that # Merge is a key step in this regard and lays a foundation for further substantial reduction of gas fees. The transaction speed will remain basically unchanged. Although some minor changes are expected, end users are likely not to notice them. Merging is not the last step of Ethereum. On the contrary, according to Vitalik, the network will complete about 55% after the merger.

So, what is the next step for Ethereum?

The roadmap shows that after Merge, Ethereum has four stages: Surge, Verge, Purge and Splulge.

The Surge:

Divide the whole network of the blockchain into smaller blocks. In the future, multiple blockchains will be able to conduct transactions and verification at the same time, improving the efficiency of the entire Ethereum network.

The Verge:

The design of Verkle Trees is introduced to optimize the data storage on Ethereum.

The Purge:

By eliminating historical data and eliminating technical debt, the verifier no longer needs to use a lot of hard disk space for verification.

The Splurge:

The upgraded coordination of the four different parts aims to build the emergence of bugs and ensure the smooth operation of the network.
However, the most important thing now is the upcoming Ethereum Shanghai upgrade.

Previously, several major updates were planned for Shanghai's upgrading:

EVM Object Format (EOF): proposed by Ipsilon team to improve EVM without destroying the current contract, provide new functions for the contract deployed with a specific ID code, and keep the existing contract running.

Beacon Chain Disbursement: EIP-4895 enables the beacon chain to process all or part of the disbursements and include them in the executive layer, allows the verifier to pledge the reward and maintain the 32 ETH equity required by the verifier.

Tier 2 fee reduction: Since the existing tier 2 scheme validates the transaction data at the executive level (L1), most of the end user fees still come from the data storage of the executive level. The developers propose two solutions:

Reduce the cost of calling data: through EIP-4488, the storage cost of L1 calling data (CALLDATA) is reduced from 16 gas per byte to 3 gas.

Fragmentation: EIP-4844 makes Ethereum closer to the deployment of complete fragments. This proposal introduces blob fragment transaction type, which is similar to mini fragments. All nodes need to verify blob data, but the data blocks are only for time limited access rather than permanent storage.

Other improvement proposals:

EIP-3651: Reduce the cost of accessing COINBASE address gas.

EIP-3860: limit the initcode scale and introduce Gas; Gas Metering.

EIP-3855: Reduce the contract code size.

Marius Van Der Wijden, core developer of Ethereum, said on the 16th that core developers may agree to solve the problem of pledge ETH withdrawal in the next "Shanghai" upgrade, but the specific content of this upgrade is still unclear. If the "Shanghai" upgrade content is too much, it may affect the test progress. For example, if there are 10 changes in the "Shanghai" upgrade, you need to test each change separately, and also test how different changes interact with each other. This means that once the number of functions included in the "Shanghai" upgrade increases, the test workload will increase exponentially, which will eventually lead to the delay of the "Shanghai" upgrade date. As the upgrade of "Shanghai" will solve the problem of withdrawal of pledged ETH, once it is delayed, the interests of pledgers and verifiers may be affected.

Beyond BTC?

After the merger, Ethereum's narrative has changed, and its token economic model has changed dramatically. The growth of ETH supply dropped significantly, and the deflation model started. As RaoulPal, founder of RealVision, a macro research institution, said on his social platform, PoS will bring positive changes to Ethereum. The biggest narrative of Ethereum merger will be revenue, not supply reduction, and the benchmark yield it provides will change everything.

From this point of view, Ethereum is creating more revenue and profitability, greatly improving its competitive position with Bitcoin.

Brett Winton, the new chief futurist of ARK Invest, said that there is a view in the market that Bitcoin and Ethereum compete with each other, which is not true. In fact, it is not true after the merger of Ethereum. Bitcoin itself is most likely to win the currency revolution. The conservatism of the agreement actually means that it is likely to replace the second tier currency as a medium of exchange over time. Compared with PoS, PoW is a more powerful decentralization mechanism. Therefore, when Ethereum transfers to Proof of Rights, there will be various potential benefits and interesting things, but it will actually make the competition space more isolated.

Bankless said: "BTC is the most reliable neutral asset. Over the years, it has experienced dozens of failed attempts by an organized group to unilaterally modify the underlying code of Bitcoin and increase the size of its nodes. The reliability of BTC has become its core intrinsic value proposition. However, the reliability of Bitcoin does not mean that the asset will maintain its value or be priced in purchasing power or fiat currency. On the contrary, the core design of Bitcoin is not programmable, and is not available to the holder There is any value added, and its mining cost structure leads to significant value leakage. This is why for Bitcoin, reliability is not equal to investability. "

Bankless pointed out that since 2016, every major catalyst in the encryption market has been driven by the commitment or implementation of web3 applications that Bitcoin does not support. So far, BTC has only been created in Ethereum community (and other communities)“Benefited from the huge wave of "practical and useful things"。 This is why BTC is not sustainable as an investment, why it is guaranteed to surpass BTC, and why it is beneficial to encryption - because it will eliminate the non investable assets as our industry leader.

However, there are also some objections in the market.

Paolo Ardoino, chief technology officer of Tether and Bitfinex, said today that Ethereum is still not comparable to Bitcoin because its statement has been changing. Ardoino said: "Bitcoin is a form of currency, while Ethereum hovers between claiming to be a form of currency and a platform. However, ETH cannot compete with Bitcoin in currency because there is no fixed supply, and it is not a real world computer because it has a shared global state, so it is too slow to expand."