Contrary to what many seem to believe, Ethereum\u2019s upcoming \u201cMerge\u201d hard fork, which is when the Ethereum network is making the transition from proof-of-work (PoW) to proof-of-stake (PoS), will not lower Ethereum\u2019s gas fees (i.e. transaction costs).<\/p>\n
Here is how Ethereum Foundation\u00a0explains\u00a0The Merge, which is expected to take place around September 15:<\/p>\n
\u201cThe Merge represents the joining of the existing execution layer of Ethereum (the Mainnet we use today) with its new proof-of-stake consensus layer, the Beacon Chain. It eliminates the need for energy-intensive mining and instead secures the network using staked ETH. A truly exciting step in realizing the Ethereum vision \u2013 more scalability, security, and sustainability.<\/em><\/p>\n \u201cIt\u2019s important to remember that initially, the\u00a0Beacon Chain\u00a0shipped separately from\u00a0Mainnet. Ethereum Mainnet \u2013 with all it\u2019s accounts, balances, smart contracts, and blockchain state \u2013 continues to be secured by\u00a0proof-of-work, even while the Beacon Chain runs in parallel using\u00a0proof-of-stake. The approaching Merge is when these two systems finally come together, and proof-of-work is replaced permanently by proof-of-stake.<\/em><\/p>\n \u201cLet\u2019s consider an analogy. Imagine Ethereum is a spaceship that isn\u2019t quite ready for an interstellar voyage. With the Beacon Chain, the community has built a new engine and a hardened hull. After significant testing, it\u2019s almost time to hot-swap the new engine for the old mid-flight. This will merge the new, more efficient engine into the existing ship, ready to put in some serious lightyears and take on the universe.<\/em>\u201c<\/p>\n Yesterday, Binance pointed out three of the main benefits that the Merge will deliver:<\/p>\n However, one unfortunate common misconception about the Merge upgrade is that it will bring down Ethereum\u2019s gas fees. For example, last Friday (August 12), former White House Director of Communications\u00a0Anthony Scaramucci, who is the founder and managing partner of global alternative investment firm\u00a0SkyBridge Capital,\u00a0shared his thoughts on the crypto market. <\/p>\n Saramucci, whose firm is very bullish on Bitcoin, Ethereum, Solana, and Algorand, spoke to Melissa Lee on CNBC\u2019s \u201cSquawk Box\u201d, and according to a\u00a0report\u00a0by The Daily Hodl, here is what he had to say about Ethereum\u2019s Merge protocol upgrade:<\/p>\n \u201cAnd of course, you have The Merge coming with Ethereum, which is going to lower the transaction fees on that network. A lot of traders are probably buying that rumor.<\/em>\u201c<\/p>\n https:\/\/youtube.com\/watch?v=xpx-tlwfUws%3Ffeature%3Doembed<\/p>\n On August 13, CoinMarketCap published an article (titled \u201cEverything You Need To Know About the Ethereum Merge: Misconceptions Debunked\u201d) by Andrey Sergeenkov.<\/p>\n Here is what this article had to say about the impact of the Merge upgrade on Ethereum\u2019s transaction fees:<\/p>\n \u201cContrary to what most people may think, The Merge will not alter Ethereum\u2019s gas fees. It does not expand the network capacity, nor does it provide more efficient transaction structures.It is a change of\u00a0consensus mechanism\u00a0and will pave the way for future transaction fee improvements, but lower gas fees will not come courtesy of The Merge.<\/em><\/p>\n \u201cTo understand why, you\u2019d first have to understand how Ethereum\u00a0gas fees\u00a0work: they are the result of network demand versus network capacity. As the network reaches maximum capacity and demand remains high, gas fees will go up. However, lower fees may occur when demand stays the same or decreases and network capacity does not max out. The Merge does not influence this correlation, although future upgrades may offer improvements.<\/em><\/p>\n \u201cThe switch to PoS will lay the foundation for sharding, and higher throughput. Those upgrades will not roll out anytime soon, though, as there is no official timeline for their Mainnet activation.<\/em>\u201c<\/p>\n On July 21, Buterin shared his thoughts about \u201cthe longer-term future of the Ethereum protocol\u201d at the annual\u00a0Ethereum Community Conference\u00a0(EthCC) in Paris, France.<\/p>\n Buterin started his talk by saying:<\/p>\n