Although September is traditionally associated with lower activity in the crypto market, it was precisely this month that saw a watershed event: Ethereum completed its long-awaited transition to Proof-of-Stake, known as The Merge. In this article, drawing on my experience of analysing and implementing blockchain solutions, I unpack what The Merge means, the opportunities it opens up, and the risks it entails.
What is The Merge?
The Merge is the historic transition of Ethereum’s mainnet from the Proof-of-Work (PoW) algorithm to Proof-of-Stake (PoS). Previously, network security was provided by miners using computational power. It is now maintained by validators who lock up 32 ETH to participate in staking.
This change has allowed Ethereum to:
- abandon energy-intensive mining;
- lower the barriers to participating in the network;
- improve environmental sustainability;
- become more attractive to institutional investors.
Ethereum’s energy consumption has fallen by 99.95%, making it a far more appealing option for ESG-minded investors and corporate institutions.
Stages of Ethereum’s transformation
The Merge is the first step in a large-scale architectural overhaul of Ethereum. It will be followed by four key stages:
The Surge — introducing sharding
The blockchain will be split into many parts known as ‘shards’. There will be 64 shard chains in total. Each shard will keep its own transaction history, speeding up and simplifying validation.
The Verge — introducing Verkle trees
This phase will bring code fragmentation and data-storage optimisation using Verkle trees. Users will be able to become network validators without having to store vast amounts of data on their own machines — another strong boost to scalability.
The Purge — pruning blockchain history
The amount of disk space validators need will be reduced by simplifying the protocol and pruning old network history over time. This will ultimately lessen network bloat.
The Splurge — final polish
The Splurge is a set of finishing improvements, updates and protocol tuning to ensure stable network operation.
Once all phases are complete, Ethereum could handle up to 100,000 transactions per second — more than 5,000 times today’s levels.
Why PoS is a strategic choice
PoS is not merely an algorithm; it is a new trust model. As a specialist who has studied attacks on blockchains, I note that the high entry threshold (32 ETH) makes network attacks such as a ‘51% attack’ economically unviable. For example, mounting such an attack would require locking ETH worth billions of dollars — practically impossible in real terms.
In addition, PoS can:
- reduce congestion and increase throughput, addressing the scalability problem;
- lower the cost of security;
- enhance environmental sustainability.
Risks and challenges
The transition has elicited a mixed response from market participants. Having observed similar changes in other blockchains, I would not rule out the possibility that The Merge could negatively affect some tokens operating on the Ethereum network. There is also the risk of temporary outages if not all protocols are migrated from Proof-of-Work to Proof-of-Stake in step.
One of the most tangible consequences of Ethereum’s move to Proof-of-Stake has been the exclusion of miners from the ecosystem. They previously played a key role in securing the network by using computing power to validate transactions. After The Merge their participation became technically impossible, prompting protests and attempts to preserve the old model.
Market reaction and outlook
For now, the market remains cautious. The ETH price did not rally meaningfully after The Merge, in part due to macroeconomic factors, including the US Federal Reserve’s tighter monetary policy and a general decline in risk appetite.
Nonetheless, several top platforms — including the NFT marketplace OpenSea and the exchange Uniswap — have already signalled their readiness to support the single official version of ETH: the upgraded PoS-based Ethereum.
In my view, PoS’s environmental profile is likely to attract large funds such as BlackRock, which previously steered clear of PoW blockchains.
The Merge is not just a protocol update; it marks the beginning of a new architectural era. In the short term (through to the end of the year), the network is likely to remain stable: The Merge passed without technical failures, and key infrastructure players have confirmed their support for the upgraded version. The next major milestone will be The Surge, which will further strengthen the network’s competitiveness.
That said, I expect the market to stay cautious: the ETH price may not show explosive growth given broader sentiment and the lack of immediate economic gains from the transition.
We will be watching the further development of Ethereum — and its forks — closely.
