Key Takeaways
Ethereum completed The Merge in September 2022, transitioning from Proof of Work to Proof of Stake.
The upgrade significantly reduced ETH issuance and introduced energy-efficient block validation.
Ethereum now relies on validators rather than miners, changing the network’s reward model and making ETH potentially deflationary.
Introduction
Since its launch in 2015, Ethereum has become a leading platform for decentralized applications, enabling thousands of projects to be built on its blockchain. However, as adoption has grown, Ethereum’s original infrastructure has struggled to scale efficiently, resulting in high fees and network congestion during periods of high demand.
To address these limitations, the Ethereum community proposed a series of major upgrades aimed at improving scalability, security, and sustainability. These include the Beacon Chain, The Merge, The Surge, The Verge, The Purge, and The Splurge. Together, these upgrades represent Ethereum’s roadmap for evolving into a more robust and future-proof network.
Why Is Ethereum Upgrading?
Blockchains are usually designed with a core principle of decentralization instead of relying on a central authority. The benefits of decentralized blockchains include being permissionless, trustless, and more secure by being resistant to single points of failure.
As blockchains grow more popular, platforms must ensure that they can match the global need for transaction processing speeds, also known as scalability demands. Failure to do so can result in congestion of the network, when blockchain capacity is overwhelmed by the number of pending transactions. Often, this leads to higher transaction fees.
However, achieving security and scalability can get tricky if blockchains want to preserve their decentralized nature. This problem is explained by the concept of the scalability trilemma as proposed by Vitalik Buterin. The Blockchain Trilemma describes the challenge of balancing three important properties – scalability, security, and decentralization.
As Vitalik Buterin acknowledged, the pre-Merge Ethereum network can’t satisfy the criteria for scalability due to its consensus mechanism, Proof of Work. A Proof of Work blockchain tends to be harder to scale due to a number of reasons. Firstly, the number of transactions that can be validated in each block is limited. Secondly, blocks have to be mined at a constant rate.
For example, Bitcoin is designed to have blocks mined every 10 minutes on average, according to the mining difficulty that is automatically adjusted by the protocol. While Bitcoin’s design is highly secure, the block time combined with the limit of transactions per block can lead to network congestion during times of increased demand. This often causes transaction fees and confirmation times to rise significantly.
To overcome these constraints, Ethereum began transitioning to Proof of Stake (PoS) and outlined a long-term plan for further improvements.
An Overview of the Ethereum Upgrades
Ethereum's upgrade path includes several key phases:
Beacon Chain (launched December 1, 2020)
The Merge (completed September 15, 2022)
The Surge (ongoing, includes proto-danksharding)
The Verge, The Purge, The Splurge (future roadmap)
Each phase addresses different aspects of Ethereum’s functionality and performance.
The Beacon Chain
The Beacon Chain introduced Proof of Stake to Ethereum and ran in parallel with the existing mainnet prior to The Merge. It allowed users to stake ETH and participate in securing the network through validator nodes. The Beacon Chain became Ethereum’s new consensus layer after The Merge.
The Merge
The Merge was a pivotal upgrade that marked Ethereum's full transition from Proof of Work to Proof of Stake. It unified the existing execution layer (Ethereum mainnet) with the consensus layer (Beacon Chain).
Consensus mechanism
After The Merge, Ethereum no longer relied on mining. Instead, blocks are proposed and validated by stakers (validators), who are randomly selected to add new blocks to the chain. Validators are rewarded with staking yields and transaction fees. This system is significantly more energy-efficient and sustainable compared to PoW.
Mainnet transactions
With The Merge, all Ethereum transactions are now validated through the Beacon Chain. It serves as the single source of consensus for the entire network, including execution data and account balances.
Token supply
The current model has a token issuance system that distributes roughly 13,000 ETH per day in mining and staking rewards. After The Merge is implemented, there will no longer be mining rewards, reducing the new ETH issuance to approximately 1,600 ETH per day in staking rewards.
Ethereum’s transaction history remained intact, and no action was required from users during the upgrade. However, the economics of ETH issuance changed significantly:
Under PoW: ~13,000 ETH/day issued
Post-Merge under PoS: ~1,600 ETH/day issued (variable)
Combined with the ongoing fee burn from EIP-1559, ETH has experienced periods of net deflation, depending on network activity.
What Came After The Merge?
Following The Merge, Ethereum moved into the next phases of its roadmap. One of the most important milestones was the rollout of proto-danksharding (EIP-4844) in early 2024, a major step toward improved scalability.
Proto-danksharding
Part of The Surge, proto-danksharding introduced a new transaction type called "blobs," which are optimized for rollups to post large volumes of data more efficiently. This lays the groundwork for full sharding in the future.
While full data sharding has not yet been implemented as of mid-2025, proto-danksharding significantly reduces data costs for layer-2 rollups, improving transaction speeds and reducing fees across the ecosystem.
Other roadmap milestones
The Verge is about making Ethereum more efficient with the help of Verkle Trees, a new kind of data structure that makes it easier to prove and verify information on the blockchain.
The Purge is focused on cleaning things up by removing old, unnecessary historical data. This helps reduce the amount of storage needed to run a node and simplifies the protocol overall.
The Splurge is a catch-all phase for smaller upgrades that don’t fit neatly into the other categories. These improvements aim to fine-tune Ethereum’s performance and make life easier for developers.
These upgrades are still in progress and there is no set timeline for when they will go live, but they are all part of Ethereum’s long-term plan to stay fast, efficient, and developer-friendly.
Impact on ETH Supply and Price
By eliminating mining and reducing new ETH issuance, The Merge fundamentally altered Ethereum’s tokenomics. Combined with the fee burn mechanism, this has created deflationary pressure on ETH supply. While this may support long-term value appreciation, price movements remain subject to broader market forces.
Closing Thoughts
The Merge marked a big milestone for Ethereum, shifting the network to Proof of Stake and paving the way for future growth. With proto-danksharding already in place and more upgrades on the horizon, Ethereum is steadily moving toward being faster, more efficient, and better equipped to handle global demand.
Further Reading
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