The Merge will not reduce gas fees, says Ethereum Foundation

An update to misconceptions surrounding The Merge, the long-awaited merger that will lead to Ethereum becoming a Proof of Stake (PoS) network, indicates that the arrival of the merger will not reduce gas fees, as many on the network expect. 

The high cost of transacting on Ethereum has been one of the main problems affecting users of this blockchain network in recent years. While two years ago, sending a transaction on Ethereum cost just a few cents, the boom in decentralized finance (DeFi) in 2021 sent fees on the network skyrocketing; a reality that made the use of this blockchain impossible for many of its users. 

In May 2021, according to data from the Bit Infocharts platform, commission fees for simple transactions on Ethereum reached an average of $70. 

Although the high cost of transactions brings great benefits to miners on the current network, the truth is that many projects based on this blockchain began to look for new alternatives in the crypto industry to offer their users more accessibility, while Ethereum developers provide an effective solution to high gas costs. 

The promises of Ethereum scalability

Proposals for improvements such as EIP-1559, promised to increase the block size to reduce gas fees on Ethereum. However, as Coin Metrics noted, High transaction fees are fundamentally a scalability problem on the network, so Ethereum must significantly increase its transaction processing capacity to cope with its high demand and be able to lower fees. 

“Gas prices will remain high as long as there is strong competition for block space”, Coin Metrics said in a report published in March last year. 

So the solution to this problem is the new Ethereum 2.0 network, called the consensus layerAccording to the Ethereum Foundation, the new Proof of Stake-based chain will be more scalable, efficient, secure and sustainable.

This new blockchain network It was launched in late 2020, with the generation of the Genesis block on the Beacon Chain, the beacon chain that introduced PoS to the network and where transactions are collected and confirmed by node validators, rather than block miners.

However, while Ethereum 2.0 is intended to make Ethereum a more scalable, efficient and sustainable blockchain, its development has been carried out in phases. 

Ethereum 2.0 and the misconceptions about The Merge

As Ethereum Foundation developers explain, The Merge, the first phase towards building Ethereum 2.0, will be about merging the current Proof of Work-based mainnet with the Beacon Chain, which uses the Proof of Stake consensus protocol. But this merger is only intended to eliminate the need for energy-intensive mining, not to increase the network's scalability. The latter will come with the other development phases. 

In the section "Misconceptions about The Merge” (misconceptions about The Merge), the developers explain that The Merge “It is a change in consensus mechanism, not an expansion of network capacity, and will not result in lower gas fees”. Thus, contrary to expectations, network gas fees will remain high after the merger is completed. 

The Bit Infocharts platform shows that current Ethereum fees are around $2,58 on average. While this is still a high cost, this value is certainly more accessible to users in general, but its fall is related to the slowdown of the crypto market, not to the scalability of the blockchain, so it is quite likely that fees will increase again when the use and demand of the network grows and it becomes congested. 

The Surge, sharding in Ethereum

The increase in Ethereum's scalability will come with The Surge, the next Ethereum upgrade after The Merge, which is expected to arrive in 2023, according to the roadmap shared by Vitalik Buterin during his participation in the EthCC 5 conference, held in Paris at the end of July. 

The Surge will introduce the sharding (fragmentation) to the Ethereum network, allowing the blockchain to split into smaller blockchains to increase its scalability and performance. 

Continue reading: Ethereum development to increase to 55% after The Merge