Hello, is it ETH you’re looking for?

Gm. *Siri, play The Final Countdown.* Next week, one of the most historic moments in crypto history will take place (fingers crossed). I feel like a kid on Christmas morning, except this time I’m spending less time wondering if Santa brought me a bike and more time wondering if Vitalik is on course for a complete catastrophe.

To make the wait more bearable, we’re spending today clearing up some confusion about what Ethereum’s Merge will and will not do. Let’s go.

—Angelina

5 Myths About the Merge, Debunked

If we had a dollar for every time friends and family who aren’t into crypto brought up the Merge to us this past month…it wouldn’t matter, because we don’t do fiat here. But you know something’s BIG when even that one old college roomie who “doesn’t care about finance” asks you about Ethereum’s impending update.

The Merge has become ubiquitous. Even the New York Times covered it. But as we learned with the Don’t Worry Darling press tour, attention goes hand in hand with misconception. Today, we’re here to debunk the Merge myths that might keep you up at night.

Ethereum’s two major current issues—high gas fees and blockchain scalability—won’t be solved by the Merge, at least not directly.

• Gas fees won’t drop. An expansion of network capacity is required to reduce transaction costs. The Merge isn’t that—it’s simply a change of the underlying consensus mechanism. However, the transition to PoS is a precursor for Ethereum’s major sharding upgrade—the Surge, which will address gas fees by reducing network congestion some time in 2023.

• Transactions won’t get faster. Transaction times will increase only marginally (so marginally you probably won’t notice). Block publishing time—the time it takes for the network to create a new block—is set to clock in at 12 seconds, down from 13.3 seconds pre-Merge.

Ethereum’s mainnet has never had a blackout, and its developers are set on keeping it that way. This isn’t Solana, people.

While a smooth transition to PoS is easier said than done considering the massive size of Ethereum’s network, we’re confident that the devs can keep their promise. They’ve engaged in extensive testing procedures, made steady progress, and been deliberate in vibe.

Post-Merge, validators are incentivized to withdraw funds if their staking balance is above 32 ETH. But fear not: Stakers won’t cause a price slump by dumping their ETH on the market. Here’s why.

For one, staking rewards and newly issued ETH will be locked and illiquid for at least 6–12 months after the Merge.

Stakers won’t be able to withdraw their assets until after the Shanghai Upgrade, the next major update following the Merge. But even then, they can’t exit all at once—the rate at which users can unstake ETH will be controlled through a bottleneck mechanism designed to slow withdrawals.

Side note: Even when stakers can start selling their previously locked up ETH, it’s likely that any potential selling pressure would be mitigated by buying pressure. Investors who waited for the Merge to de-risk Ethereum will likely jump at the chance to grab a few ETH once the update is complete. Not to mention that stakers who want a liquidity exit door probably would have staked their ETH with a “liquid staking” protocol such as Lido to bypass the locked nature of staking from the beginning.

Not quite. ETH staking yields will increase post-Merge because transaction fees are reallocated from miners to validators. Outdated predictions, calculated back when Ethereum’s network usage was at an all-time high, estimated that yields would triple after the upgrade.

That myth persisted, but the truth is this: Staking APR will increase by ∼7%, that’s only 50% higher than current yields. Significant, but not 3x significant.

Not everyone has 32 ETH spare to run their own validator node. We sure don’t. Fortunately, reaping staking rewards doesn’t require whale status.

If you don’t have the means to stake solo, staking pools are a viable alternative. These enable users to pool their resources together to hit the 32 ETH requirement and create a validator node. Rewards are then split up between participants according to the pool’s own set of criteria.

Big picture: There’s a lot that the Merge won’t do. Maybe you’re left wondering, “If it doesn’t reduce gas fees, what’s the point?”

Well, the Merge is the most significant upgrade in Ethereum’s history for a reason. Switching to PoS not only cuts Ethereum’s energy use by 99.95%, it also sets the stage for a string of future updates.

It’s these future updates that will transform Ethereum into the scalable, sustainable, and secure project that Vitalik has been envisioning for years. And the final product is bound to have major ripple effects—given that Ethereum is the most-used blockchain, the updates’ outcomes won’t just affect Ethereum itself, but also the plethora of dApps, DeFi protocols, and NFTs relying on it.

And that’s what you need on your crypto radar today. Before you tune in again on Tuesday, hit us up with your Merge predictions. Until then, keep calm and hodl on.