The 2nd week of September 2022 will go down in the history of cryptocurrency as Ethereum proceeds with The Merge, its consensus mechanism overhaul. It is a massive transformation that will pave the way for future scalability enhancements such as sharding. This page describes The Merge and numerous potential problems to be aware of throughout the transition period.
As advantageous as The Merge will be, it will not be risk-free, either from scammers attempting to steal the chance of prospective victims or from technical glitches. “As we approach the Merge of Ethereum Mainnet, you should be on high alert for frauds seeking to profit from individuals during this transition,” warns the Ethereum Foundation.
What is the Ethereum Merge
By switching from a proof-of-work (PoW) consensus protocol to a proof-of-stake (PoS) system, the Ethereum Merge is the second most significant step in accomplishing the Ethereum ideal of protection, stability, decentralization, and longevity. This transition will almost entirely minimize energy use. The process of creating a block on the blockchain will shift from miners running power-hungry graphics processing units (GPUs) to staking validators.
According to the Ethereum Foundation, “validators get new structures from peers on the Ethereum network.” The block’s transactions are re-executed, and the block signature is validated to guarantee the block’s validity. The verifier then broadcasts around the network a vote (called an attestation) in favour of that block.” This transition sets the path for future enhancements that will lower transaction fees while also increasing transaction speed.
9 Major Risks of the Ethereum Merge
No progress has been without threat, and evil actors strive to profit from the uncertainty and confusion that change brings. During The Merge, expect petty thieves to take advantage of crypto consumers’ naivety, credulity, disinterest, and selfishness. Here are a few risks of the Ethereum Merge to be aware of:
- Fake Airdrops: There will be no airdrops from the Ethereum Foundation, so if you receive one, disregard it or transfer it to a burn address.
- Phishing Scam: Many users are conscious of the numerous phishing scams in which scammers attempt to obtain your personal details. This week is likely to see an increase in ETH-related phishing attacks.
- Support Scams: Organizations and individuals claiming to be part of a support group may request data or gain access to your device. Do not, however, hand any data.
- Fraudulent Mining Pools: These frauds propose a swap website with large payouts for transferring coins to a bogus mining pool. According to Coinbase, consumers have lost over 50 million dollars in this manner.
- Misleading offers for a nonexistent ETH2 token: According to the Ethereum Foundation, individuals must “not transmit your ETH wherever in an effort to ‘upgrade to ETH2.'” There is no ‘ETH2’ token, and there is nothing further you must do in order to keep your cash secure.”
- Risks of Outage: Although it is improbable, The Merge could cause a downtime comparable to what occurred with Solana previously.
- The Power of Slashing: The capability to slash ETH in a PoS system is advantageous to the protocol, but it has some risks attached since if someone hacks the network and slashes coins, they are irreversibly lost.
- Little or No Reduction of Gas Fees: Transaction fees are not projected to reduce following The Merge, although future updates are aimed at lowering fees.
- Miniscule Reduction in Time for Reduction: Transactions in Ethereum take up to 13 to 14 seconds; having followed The Merge, transactions may take up to 12 seconds, keeping Ethereum behind Solana and Avalanche. To put the situation into perspective, mining a Bitcoin block takes roughly 10 to 15 minutes. The upcoming Ethereum upgrade, which will include distributed storage, is expected to lower the transaction time cycle and fees for customers.