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August 17, 2022

Ethereum Foundation says Merge won’t cut gas prices

The Ethereum Foundation issued a statement on Wednesday stating that the planned proof-of-stake temporary update for the network, which is being referred to as the “Merge,” would not result in a reduction in the cost of gas. Regarding this topic, the Ethereum Foundation published the following statement:

“Gas prices are determined by the amount of demand placed on the network in comparison to its total capacity. The Merge eliminates the need for proof-of-work and replaces it with proof-of-stake as the mechanism for reaching an agreement. However, it does not dramatically alter any parameters that directly affect the capacity or throughput of the network.”

Merging the present execution layer of the Ethereum mainnet with its new proof-of-stake consensus layer, the Beacon Chain, will remove the need for energy-intensive mining. It will likely arrive in the third or fourth quarter of 2022.

Although a large number of investors and traders have purchased Ether in preparation for the Merge upgrade, it seems that some of those purchases were made under the false impression that the network’s capacity would increase once the update is fully operational.

To begin, there are no initial Ether staking requirements, which means that anybody may sync their own self-verified copy of Ethereum or host a node without incurring any costs. It is not possible to withdraw staked Ether until the next Shanghai update goes online.

Despite this, however, tradable ETH incentives in the form of fee tips will be made accessible right now. Once launched, the pace of Validator withdrawals will be regulated to avert a possible liquidity crisis.

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After the Merge, there will not be a discernible increase in the speed of transactions. However, in order to attract capital after the Merge, it is anticipated that the APR returns on the network would rise by a factor of 50% over their current levels. Client developers are now working toward a provisional deadline of September 19 to finish the Merge, which is intended to ensure that there is no downtime experienced during the transfer.