On July 7, the Ethereum blockchain network successfully executed its second major test for "The Merge" — transitioning from Proof-of-Work (PoW) to Proof-of-Stake (PoS) consensus. This critical rehearsal occurred on the Sepolia testnet, marking another milestone toward Ethereum's historic upgrade. With two out of three planned tests completed, the final rehearsal on the Goerli testnet remains before the mainnet merge.
While an exact timeline remains unconfirmed, Ethereum founder Vitalik Buterin and core developers have reiterated that the merge will occur within 2023. This shift aims to create a more scalable, energy-efficient Ethereum through its three-phase upgrade plan: Beacon Chain launch, The Merge, and Shard Chains.
Ethereum's Upgrade Journey: 60% Progress Achieved
The Beacon Chain Foundation
Launched in December 2020, the Beacon Chain introduced PoS consensus, allowing users to stake 32+ ETH to become validators. As of July 7:
- 405,782 active validators secure the network
- 12.94 million ETH staked (10.5% of circulating supply), a record high
The Merge: PoW to PoS Transition
The Merge will deactivate Ethereum's PoW chain, merging it with the Beacon Chain. Key points:
- Three testnet rehearsals (2 completed: Sepolia + earlier)
- Difficulty bomb will phase out ETH1 (execution layer)
- Consensus layer (formerly ETH2) will handle PoS validation
Post-Merge: Shard Chains
Sharding will enhance scalability by parallelizing transactions across 64 chains, drastically improving throughput.
Declining Daily ETH Staking: Market Sentiment or Rational Caution?
Despite rising total ETH staked, daily deposits have dropped since May 2022:
- Peak: 121,648 ETH (May 2)
- Lows: Multiple instances of 32 ETH (minimum stake)
Possible Reasons:
- Bear Market Psychology: Users avoid locking assets during volatility.
- Delayed Rewards: Staking yields unlock post-merge.
- Security Concerns: Validators await merge stability proofs.
- Liquidity Preferences: Alternatives like liquid staking platforms gain traction.
👉 Discover how liquid staking mitigates these challenges
Liquid Staking Platforms: Balancing Yield and Flexibility
1. Lido Finance (Market Leader)
- TVL: $4.95 billion
- Mechanism: Users stake any ETH amount, receive stETH tokens (1:1 pegged + rewards).
- Use Cases: Trade stETH on DEXes or leverage in DeFi protocols (e.g., Aave).
2. RocketPool (Decentralized Alternative)
- Validator Model: Users can run nodes with 16 ETH (vs. 32 ETH solo).
- rETH Tokens: Liquid staking receipts earn compounding yields.
3. StakeWise (Dual-Token System)
- sETH2/rETH2: Separates staked principal from rewards for flexible DeFi integration.
Risk Note: Liquid staking derivatives (e.g., stETH) may depeg during extreme volatility.
FAQs: Ethereum Merge and Staking
Q1: When will Ethereum merge happen?
A: Expected in 2023 post-Goerli testnet rehearsal (final trial).
Q2: Will ETH become deflationary post-merge?
A: Yes, via EIP-1559 fee burns and reduced issuance (estimated ~90% drop in new ETH).
Q3: Can I unstake ETH immediately after the merge?
A: No. Withdrawals will activate in a subsequent upgrade (likely 6-12 months post-merge).
Q4: How does liquid staking differ from solo staking?
A: Liquid staking offers tradable tokens representing staked ETH, bypassing lockup periods.
👉 Explore ETH staking strategies pre-merge
Conclusion: Navigating the Merge Transition
Ethereum's upgrade promises long-term scalability but requires user adaptability. While staking dips reflect short-term caution, innovations like liquid staking demonstrate the ecosystem's resilience. As the merge nears, monitoring testnet outcomes and market reactions will be crucial for stakeholders.
Disclaimer: This content is for informational purposes only and does not constitute financial advice. Always conduct independent research before making investment decisions.