The Merge will not decrease gas fees, contrary to popular belief, according to the Ethereum Foundation, although the upgrade will result in a 99.5% reduction in network energy use.
The Ethereum Foundation updated its statement on Wednesday to clarify that the future “Merge” proof-of-stake temporary upgrade will not lower gas costs. The Ethereum Foundation wrote this in reference:
“Gas fees are a product of network demand relative to the network’s capacity. The Merge deprecates the use of proof-of-work, transitioning to proof-of-stake for consensus, but does not significantly change any parameters that directly influence network capacity or throughput.”
The Merge, which seeks to join the existing execution layer of the Ethereum mainnet with its new proof-of-stake consensus layer, the Beacon Chain, will eliminate the need for energy-intensive mining. It is expected to land within the third or final quarter of 2022. While many investors and traders alike have bought Ether in anticipation of the Merge upgrade, some appear to have done so under misconceptions that the network’s capacity will surge once the upgrade is live.
There are no initial Ether staking requirements and anyone is allowed to sync their own self-verified copy of Ethereum or to run a node. It is not feasible to withdraw staked Ether until the subsequent Shanghai upgrade is operational. However, benefits for liquid ETH in the form of fee tips will be accessible right away. Once launched, withdrawals from the validator will be rate-limited to avoid a possible liquidity crisis.
After the Merge, transactions are not guaranteed to move any faster. The network’s APR returns are anticipated to climb by 50% after the upgrade to attract finance. The Merge, which is planned to have minimal downtime during the transition, is now being developed by client developers with a possible completion date of September 15 in mind.