What is the Ethereum Merge?

Ethereum Merge

what is the ethereum merge — answered up front: the Ethereum Merge was the network upgrade completed in September 2022 that replaced Ethereum’s energy‑intensive proof‑of‑work block production with a proof‑of‑stake consensus system by merging the Mainnet execution layer with the Beacon Chain consensus layer. The change preserved transaction history and account balances while shifting block‑finality and validator responsibilities to PoS validators. Readers will learn what changed, why the Merge happened, technical mechanics, measurable impacts, and what it meant for users, miners/miners‑turned‑validators, exchanges, and wallets such as Bitget Wallet.

Overview

The Merge’s purpose was straightforward: transition Ethereum from proof‑of‑work (PoW) to proof‑of‑stake (PoS). That meant eliminating energy‑intensive mining, moving finality and block production to staked validators on the Beacon Chain, and preparing the protocol for subsequent scaling improvements (sharding and rollup‑centric work). The Merge itself focused on consensus — it did not directly lower transaction fees or change the execution semantics of smart contracts.

Source: ethereum.org (official Merge documentation).

Background and motivation

Before the Merge, Ethereum relied on proof‑of‑work miners to propose and build blocks. PoW is secure and battle‑tested but requires continuous, large energy consumption as miners compete to solve cryptographic puzzles. Limitations and motivations included:

• Energy use and environmental concerns: PoW consumes significant electricity. Reducing that footprint was a headline motivation.
• Issuance and economic policy: PoW miner rewards produced a rate of new ETH issuance that the community sought to reduce to improve long‑term issuance economics.
• Roadmap continuity: The Merge was the critical transition point in the long‑running Ethereum roadmap (formerly branded as Ethereum 2.0) that began with the Beacon Chain and culminated in merging consensus and execution.

The Beacon Chain (consensus PoS chain) was launched to introduce staking and a separate PoS consensus layer without affecting the Mainnet execution layer until the Merge was executed.

Source: ethereum.org; design rationale discussed in multiple public Ethereum Improvement Proposals and developer calls.

Timeline

• Beacon Chain genesis: December 1, 2020 — the consensus (PoS) Beacon Chain launched in parallel with the existing Mainnet.
• Testnets and rehearsals: Multiple public testnets and dress rehearsals ran through 2021–2022 to validate client compatibility and cross‑client behavior.
• Bellatrix upgrade: a consensus layer preparatory upgrade that activated before the Merge (late August / early September 2022 on the consensus layer) to prepare validators for the Merge event.
• Paris (the Merge) activation: September 15, 2022 — the execution and consensus layers were merged so that Beacon Chain validators took over block finality for the Mainnet state.
• Shanghai/Capella (withdrawals): April 2023 — this pair of upgrades enabled validators to withdraw staked ETH and rewards, a follow‑up to the Merge focused on validator lifecycle operations.

These milestones reflect the coordinated, multi‑client rollout and the staged plan to isolate risk and test interactions across clients.

Source: ethereum.org and public devchats, and post‑Merge upgrade notes.

Technical architecture

Execution layer vs Consensus layer

Post‑Merge Ethereum separates responsibilities between two conceptual layers:

• Execution layer (Mainnet execution): Holds the Ethereum state (accounts, smart contracts, transaction processing). This layer executes transactions, applies state transitions, and enforces EVM semantics.
• Consensus layer (Beacon Chain / PoS): Responsible for ordering and finalizing blocks via validator attestations and chosen PoS rules. Validators stake ETH to propose and attest to blocks; finality is reached through consensus rules rather than mining difficulty.

After the Merge, the execution layer continued to apply transactions and maintain state exactly as before, but block proposals and finality were now coordinated by the consensus layer using PoS.

How the Merge worked (mechanics)

Conceptually, the Merge replaced PoW block production with Beacon Chain PoS consensus while keeping the execution layer’s state intact. Key mechanical points:

• The Mainnet execution environment continued to produce execution payloads (transactions, state updates) but no longer relied on PoW to determine canonical blocks.
• Beacon Chain validators now proposed and agreed on block headers and execution payloads via PoS protocols (proposals, attestations, committees, and finality checkpoints).
• The Merge was implemented as coordinated client upgrades across execution and consensus client implementations so they could exchange and validate execution payloads under the new consensus rules.

The Merge did not change smart contract semantics, addresses, account balances, or transaction history.

Key upgrades and components

The upgrade pack that culminated in the Merge included named components used by the community to coordinate work: Bellatrix (consensus layer preparatory upgrade), Paris (the execution layer activation in coordination with Bellatrix), and earlier component releases and testnet rehearsals. The rollout relied on multi‑client coordination across execution clients and consensus clients, plus scripted activation points and public monitoring.

Testnet rehearsals (Goerli, Ropsten/others during the run‑up) were critical to proving cross‑client interop and reducing risk.

Validator design and committees

PoS replaces miners with validators. Important design elements:

• Staking deposit: Validators enter the system by depositing 32 ETH into the official deposit contract on Mainnet (this had been opened earlier to bootstrap the Beacon Chain).
• Validator duties: Propose blocks, participate in committee attestations, and participate in random sampling to secure consensus.
• Committees: Small groups of validators are randomly sampled each slot/epoch to attest to proposed blocks, improving scalability and security.
• Rewards and penalties: Validators earn rewards for correct behavior (proposing, attesting promptly and correctly) and face slashing or reduced rewards for severe misbehavior (double‑signing, persistent offline behavior) to economically disincentivize attacks.
• Finality: PoS uses checkpoint finality via the Caspar‑style LMD GHOST + finality gadget that makes reverting finalized checkpoints economically costly for attackers.

Source: ethereum.org validator documentation; consensus design papers.

Effects on the network

Energy consumption

The Merge produced a dramatic reduction in the network’s energy usage because it eliminated energy‑intensive mining. Official statements and widely quoted figures estimate the reduction in electricity consumption on the order of magnitude of 99% or more.

• As reported by ethereum.org, the post‑Merge Ethereum’s energy use dropped by approximately 99.95% compared to pre‑Merge PoW levels.

This reduction reshaped conversations about Ethereum’s environmental impact and made the network far more attractive in ESG discussions.

Source: ethereum.org.

Issuance and monetary policy

The Merge materially changed issuance dynamics:

• Miner rewards ceased; validator rewards replaced miner issuance but at a lower absolute rate.
• Net issuance decreased significantly post‑Merge; estimates commonly cited by developer resources and ethereum.org indicate issuance fell by a large percentage (in many discussions an order‑of‑magnitude decline relative to miner issuance), though exact year‑to‑year figures depend on protocol fee dynamics and burn rates from EIP‑1559.
• Interaction with EIP‑1559: Since EIP‑1559 burns a portion of fees, in periods of high fee activity ETH issuance can be fully offset by burns, producing deflationary episodes. The Merge reduced issuance baseline, making burn effects more likely to drive net supply declines when network fees are elevated.

Source: ethereum.org issuance and EIP‑1559 explanations.

Security and decentralization

Security and decentralization tradeoffs under PoS were debated extensively:

• Advantages cited: Economic penalties (slashing) can be enforced directly against staked funds, enabling financial deterrence for validator misbehavior. PoS also avoids risks tied to ASIC mining economics.
• Concerns raised: Risk of validator centralization (large staking providers or pools controlling significant validator share), long‑range attack vectors in theoretical models, and shifts in where censorship or influence might be exerted.

The security model changed from energy‑bound work to capital‑bound economic security; this difference led to new forms of analysis but did not remove the need for multi‑client diversity, open staking, and careful protocol upgrades.

Performance and scalability implications

The Merge itself did not reduce transaction fees or meaningfully increase per‑transaction throughput for the execution layer. Instead, it unlocked the ability to pursue future scaling approaches:

• Sharding and data availability improvements were now more feasible because consensus had shifted to validators and planned roadmap phases (The Surge, etc.) could proceed.
• Rollup‑centric scaling: The Merge was the consensus prerequisite enabling later work that focuses on making rollups cheaper and using the base layer primarily for settlement and data availability.

Source: Ethereum roadmap documentation and post‑Merge developer commentary.

Impact on users and ecosystem

ETH holders and wallets

ETH balances, addresses, transaction history and private keys were unchanged by the Merge — no user action was required to preserve balances. Wallets continued to work as before for sending/receiving ETH and interacting with smart contracts.

For stake management, users who wanted to run validators needed to deposit 32 ETH into the deposit contract before/after the Merge (the deposit contract had been live since Beacon Chain genesis). Many users instead used pooled staking services.

Bitget Wallet remained a recommended option for users seeking integrated, user‑friendly custody and staking interfaces (Bitget offers staking products and an easy‑to‑use wallet experience for those who prefer a custodial or hybrid model).

Miners and validator shift

PoW miners could no longer earn block rewards on Ethereum after the Merge. This led to:

• Economic disruption for GPU and ASIC miners who had focused on Ethereum mining — miners either pivoted to mining other PoW networks or exited mining.
• New opportunities for staking: Validators and staking service providers grew, and pooled staking services attracted users who preferred not to run a full validator.

No action was required for most ETH holders who were not mining; miners needed to change operations or switch networks.

Exchanges, custodians and service providers

Exchanges and custodians had to update infrastructure to support the Merge and post‑Merge operations (validator management, withdrawal support after Shanghai), and plan operationally for staking services and custody of validator keys.

• Exchanges typically coordinated maintenance windows around the Merge to ensure deposits/withdrawals and custody operations continued smoothly.
• Custodial and staking providers adapted to the new validator lifecycle, slashing‑avoidance procedures, and withdrawals once Shanghai activated.

Bitget coordinated its custodial operations and staking product to support validator management and to provide staking alternatives for users who prefer not to run their own 32 ETH validator.

Source: public custodian and exchange communications and ethereum.org guidance on node and validator operators.

Staking: mechanics, rewards and withdrawals

• Minimum solo validator deposit: 32 ETH (via the deposit contract) to operate a single validator.
• Reward model: Validators earn rewards for proposing blocks and timely attestations. Rewards vary with the total amount of ETH staked and network participation rates; when more ETH is staked, per‑validator reward rates decline because rewards are distributed across a larger stake base.
• Penalties and slashing: Validators can lose rewards for being offline or misbehaving; severe misbehavior (double‑signing or equivocation) can trigger slashing, which removes a portion of staked ETH.
• Pooled staking: Many users opt for pooled staking or custodial staking services that accept smaller deposits and manage validators on behalf of users. Pooled staking reduces operational risk for non‑technical users but concentrates staking control with service providers.
• Withdrawals (Shanghai): The Shanghai/Capella upgrades (April 2023) enabled withdrawals of staked ETH and accumulated rewards for validators, completing the deposit/withdraw lifecycle. Withdrawals operate under protocol rules to maintain network stability (e.g., rate‑limited exit queues when many validators exit simultaneously).

Source: ethereum.org validator and staking docs.

Economic and market effects

Supply dynamics

The Merge reduced baseline ETH issuance by replacing miner rewards with lower validator rewards. Combined with fee burns from EIP‑1559, the net supply change depends on network activity:

• During periods of high fees, the burn from EIP‑1559 can exceed issuance, producing net negative supply (deflationary epochs).
• Post‑Merge, with lower base issuance, it became easier for burns to outpace issuance, intensifying focus on fee dynamics in supply analysis.

Ethereum.org and academic analyses quantified issuance reductions and modeled burn effects; the specific net supply outcome fluctuates with daily fee volume.

Source: ethereum.org issuance estimates; public economic analyses.

Market reaction and investor considerations

Market responses to the Merge included short‑term volatility around the event window and a long‑term reframing of Ethereum in ESG narratives. Institutional viewpoints referenced the energy reduction and the clearer staking economics when assessing adoption and product offerings.

Public and institutional commentary often emphasized the Merge as a structural improvement (especially on energy use) while noting that fee reduction and throughput require subsequent upgrades (sharding, rollups).

Source: Kraken, Fidelity, industry coverage.

Criticisms, risks and controversies

Criticisms and risks discussed in the community included:

• Centralization of staking: Large staking providers or concentrated validator pools could wield outsized influence, raising concerns about censorship resilience and governance centralization.
• New attack classes: PoS introduces long‑range and finality compromise modeling that differ from PoW threat models, leading to research and mitigation discussions.
• Regulatory scrutiny: Staking services and staking rewards raised regulatory questions about securities classification or custody obligations in some jurisdictions.
• Debates about decentralization: Some critics argued PoS shifts the nature of decentralization from energy costs to capital control and operator diversity.

These debates remain active and are part of ongoing research, protocol development, and policy discussion.

Source: public dev discussions, industry reporting.

Security, testing and rollout governance

The Merge relied on extensive multi‑client testing, public testnets, and coordinated release timelines. Key governance and risk mitigation practices included:

• Multi‑client diversity: Running multiple, independent client implementations reduces single‑client failure risk.
• Dress rehearsals and testnets: Public testnets allowed validators and client teams to rehearse the Merge flow.
• Community coordination: Developer calls, client release timelines, and monitoring dashboards provided transparency and allowed operators to prepare.

This careful coordination is credited with a safe Merge rollout, though post‑Merge upgrades continued to be necessary to refine validator lifecycle operations and withdrawals.

Source: ethereum.org developer logs and client release notes.

Post‑Merge roadmap and future upgrades

The Merge unlocked further roadmap work focused on scalability, state management, and efficiency.

Sharding and data availability

Sharding aims to increase the amount of data the network can accept per unit time by splitting data availability across shards. The modern plan emphasizes "data shards" that primarily improve rollup capacity rather than full execution sharding.

Proto‑danksharding (EIP‑4844) introduced a format to reduce rollup costs by adding blob transactions that are cheaper for temporary data — a step toward full sharding‑style data availability improvements.

Rollups and the "rollup‑centric" roadmap

Ethereum’s scaling strategy has shifted to a rollup‑centric approach: rollups handle transaction execution off‑chain and post compressed data to the Ethereum base layer for settlement and data availability. The base layer focuses on security and data availability while rollups scale execution.

The Surge, Verge, Purge, Splurge and named phases

The post‑Merge roadmap uses broad phase labels to describe long‑term goals:

• The Surge: increase throughput via rollups and data‑availability scaling.
• The Verge: focus on statelessness and light‑client improvements (Verkle Trees are part of this work).
• The Purge: state and history pruning to reduce long‑term storage burdens for nodes.
• The Splurge: assorted improvements to make the system reliable and pleasant for users and operators.

As of December 2025, developers continued iterating on these phases. Notably, developers named upgrades such as Glamsterdam and the post‑Glamsterdam upgrade Hegota to reflect combined execution and consensus improvements in the 2026 roadmap.

As of 2025-12-23, according to The Block, Hegota was identified as the follow‑up upgrade after Glamsterdam and is intended to combine execution and consensus work to improve state management and efficiency.

Source: The Block reporting and ethereum.org roadmap materials.

Legal, regulatory and institutional implications

The Merge influenced regulatory narratives primarily through environmental and operational changes:

• ESG and energy narratives improved because the Network’s electricity consumption dropped dramatically.
• Regulatory scrutiny on staking practices, custodial staking services, and token classification continued to evolve; jurisdictions examined whether staking rewards or staking service offerings triggered additional regulatory obligations.
• Institutional acceptance: Certain institutional actors considered the post‑Merge Ethereum more suitable for integration due to lower energy impact and clearer custody/staking product offerings.

These implications vary widely by jurisdiction and remain an ongoing policy area.

Source: industry reports and public regulatory commentary.

Notable metrics and measures (post‑Merge)

• Estimated energy reduction: approximately 99.95% reduction in energy consumption compared to pre‑Merge (Source: ethereum.org).
• Change in ETH issuance: post‑Merge issuance dropped materially as miner issuance ended and validator rewards replaced it; public ethereum.org materials quantify this as a large percentage reduction in base issuance, with net supply outcomes dependent on EIP‑1559 burns and network fees (Source: ethereum.org issuance notes).
• Total ETH staked: millions of ETH have been deposited to secure the Beacon Chain and the merged network. The precise total is recorded on chain and visible in public staking dashboards; as with other dynamic chain metrics, the exact number changes daily and should be verified with live chain explorers or staking dashboards.

For live, verifiable statistics on staking totals, issuance, and energy figures, consult official protocol pages and chain explorers (Source: ethereum.org and public chain dashboards). This article references ethereum.org for baseline Merge statistics and The Block for upgrade cadence reporting as of 2025‑12‑23.

See also

• Beacon Chain
• Proof of Stake
• EIP‑1559
• Sharding
• Rollups
• Shanghai upgrade
• Ethereum roadmap (Surge, Verge, Purge, Splurge)

References and further reading

• Source: ethereum.org — Merge documentation, validator/staking guides, and issuance explanations.
• Source: Kraken research and explainer content on the Merge and staking.
• Source: Koinly and tax/FAQ materials about user implications and reporting for staking rewards.
• Source: Fidelity and institutional overviews describing market perspectives on the Merge.
• Source: Volt Capital technical overviews and industry commentary.
• Source: Visa and industry payment commentary on implications for payments and market adoption.
• Source: The Block — reporting on post‑Merge roadmap developments (Hegota/Glamsterdam) and 2026 upgrade cadence (as of 2025‑12‑23).

All factual claims in this article are attributed to the above primary sources and public protocol documentation; specific live metrics (staking totals, issuance/day, fees) are dynamic and available on‑chain and via public dashboards.

Want to learn more or manage ETH staking and wallet activity? Explore Bitget services and Bitget Wallet for staking products, custody options, and easy onboarding.

Note: This article is informational and not investment advice. All dates and figures are provided with source attribution; verify dynamic metrics on official protocol pages and chain explorers.