Ethereum Foundation clarifies that the upcoming Merge upgrade will not reduce gas fees

Ethereum Foundation clarifies that the upcoming Merge upgrade will not reduce gas fees



According to a new clarification statement by the Ethereum Foundation on Wednesday, the network’s upcoming proof-of-stake transitory upgrade, dubbed the “Merge,” will not reduce gas fees. Regardin this, the Ethereum Foundation wrote: 

“Gas fees are a product of network demand relative to the network’s capacity. The Merge deprecates the use of proof-of-work, transitioning to proof-of-stake for consensus, but does not significantly change any parameters that directly influence network capacity or throughput.”

The Merge, which seeks to join the existing execution layer of Ethereum mainnet with its new proof-of-stake consensus layer, the Beacon Chain, will eliminate the need for energy-intensive mining. It is expected to land within the third or final quarter of 2022. While many investors and traders alike have bought Ether in anticipation of the Merge upgrade, some appear to have done so under misconceptions that the network’s capacity will surge once the upgrade is live. 

For starters, Anyone is free to sync their own self-verified copy of Ethereum, or to run a node, with no initial Ether staking requirements. With regards to staking, it is not possible to withdraw staked Ether until a following Shanghai upgrade goes live. Though, liquid ETH rewards in the form of fee tips will be available immediately. Validator withdrawals, once live, will be rate-limited to prevent a potential liquidity crisis.

Transactions will also not be noticeably faster after the Merge. However, post-Merge APR yields on the network are expected to increase by 50% compared to now as to attract capital. Client developers are currently working on a tentative deadline of Sept. 19 for The Merge to complete, which is designed for zero-downtime during the transition.