The Ethereum 2.0 Beacon Chain is here. Now what?

Abiodun Ajayi
5 min readAug 12, 2022

Ethereum has been the second most valuable cryptocurrency for several years. Nonetheless, the Ethereum blockchain has been plagued by growing issues for several years. The network is being hampered by rising gas prices, slow transaction speeds, and limited scalability. This is why there is an Ethereum Merge, where the consensus mechanism is changed from Proof-of-Stake to Proof-of-Work.

What exactly is the Ethereum Merge?

The Ethereum Merge describes the transition of the Ethereum network’s consensus mechanism for validating transactions from Proof-of-Work to Proof-of-Stake. The Ethereum Blockchain should operate more quickly and efficiently. Ethereum’s scalability and the efficiency of its smart contracts should be greatly improved.

The Ethereum Merge is a highly complex process that has been ongoing at Ethereum for over a year. This is also known as Ethereum 2.0 Update. The update includes some time-consuming steps to migrate the entire network to a modern consensus mechanism. The launch is expected to take place in the third quarter of 2022.

What is it about Proof-of-Stake that makes it so rewarding for Ethereum?

For years, Ethereum has used the proof-of-work consensus mechanism. The network has become the most popular protocol for dApps and is a market leader in NFTs and DeFi. So, why should the proof-of-stake consensus mechanism be implemented?

Fortunately, the proof-of-work has caused some issues in recent months and years. While this consensus mechanism is secure and dependable, it has limitations in terms of speeding up transactions while keeping costs low. Unfortunately, with a rapidly expanding network like Ethereum, transaction costs have skyrocketed in recent years, and transaction speeds are subpar.

As a result, a change was required, and Ethereum developers recognized the need to modernize the network. As a result, the Ethereum Merge’s consensus mechanism should be modified. Other minor enhancements are being implemented to make Ethereum more efficient and secure.

What is the background of the Ethereum merge?

Vitalik Buterin, the founder of Ethereum, was an early supporter of the Proof-of-Stake consensus mechanism. As a result, it is not surprising that Ethereum has been working on the transition for quite some time. The consensus mechanism is said to reduce energy consumption by up to 99.5% when compared to proof-of-work.

The Ethereum team has been working on a lengthy and intensive implementation process for the past few months. There were always delays and rescheduling. However, this is merely a symptom of a process that necessitates extremely meticulous execution and testing. As a result, the transition is taking several months.

The components of the Ethereum merge are:

· The Beacon Chain

· The Merge

· The Shard Chains

This completes the process when the Beacon Chain is fully implemented, as this is the component that controls Proof-of-Stake. According to Buterin, this should finally be the case in August 2022.

What are the components of the Ethereum Merge?

The components mentioned above belong to the Ethereum Merge or the update to Ethereum 2.0. We would like to briefly explain these individual areas:

Beacon Chain

The Beacon Chain is a parallel chain that has been running alongside the mainnet since the end of 2020. The Proof-of-Stake consensus mechanism will be introduced and tested on it. Over time, more and more validators came onto the chain, allowing the proof-of-stake consensus mechanism to work efficiently on Ethereum.

The beacon chain itself cannot execute smart contracts. Its task is to establish proof-of-stake and to put the functionality through its paces. To be fully implemented in Ethereum, the beacon chain needs to be merged with the mainnet.

Ethereum Merge

The merge describes the merging of the beacon chain with the Ethereum mainnet. Proof-of-Stake was established on the Beacon Chain and the entire Ethereum network will be converted to Proof-of-Stake through a merger. The conversion or the merge requires extensive testing in advance in order to eliminate errors before the merge.

The Shard Chains

The shard chains are intended to significantly increase Ethereum’s scalability. These additional chains help to distribute the network’s transaction load and allow for more data to be stored on the network. The beacon chain’s purpose is to coordinate the shard network.

The shard chains were originally intended to work in tandem with the beacon chain. However, Ethereum users decided that the Ethereum merger should come first. The development and implementation of a shard chain network will now be continued after the merger into 2023.

What are the consequences of the Ethereum merge?

With the Ethereum Merge, the big announced update Ethereum 2.0 is finally coming. Ethereum then uses Proof-of-Stake, which means that Ethereum works much more efficiently and energy-saving in one fell swoop. With Proof-of-Stake, gas fees drop massively and transaction speeds increase.

However, the process is not yet complete after the merge. The shard chains, in particular, will be implemented in the coming months. As a result, Ethereum’s scalability will continue to improve in the coming months.
The Ether price should rise following the Ethereum merger. In the current bear market, a full explosion is possible but unlikely. However, Ethereum, and thus the price of the Ether Token, should skyrocket in the months to come. As a result, an initial investment in Ethereum may be worthwhile.



Abiodun Ajayi

Abiodun Ajayi has more than 6 years of experience in Security and IT architecture. He consults and helps form strategies, perform project feasibility studies.