The long-awaited Merge, one of the most closely watched shifts in the crypto world, is finally happening. Ethereum’s transition from proof-of-work (PoW) to proof-of-stake (PoS) is expected to be the most significant enhancement to the network to date and a major milestone for the Web3 industry.

As we approach The Merge, key questions are arising. How will it impact the Ethereum ecosystem? What does it mean for Ethereum miners? Will it affect Ledger users? And what about crypto’s carbon footprint? 

This article will help you find out. 

Proof-of-work is out, proof-of-stake is in

Ethereum’s blockchain currently runs on a Proof-of-Work consensus mechanism, just like Bitcoin. But soon, The Merge will mark a full transition towards Proof-of-Stake, eliminating the need for energy-intensive mining and securing the network with staked ETH. Concretely, you won’t need a mining computer to participate in the network validation, you’ll only need to use your laptop and ‘stake’ a certain amount of crypto to validate transactions. 

For Charles Guillemet, CTO at Ledger, “The Merge is one of the milestones on a long roadmap towards making Web3 use cases more easily accessible to hundreds of millions of users around the world.”

What are the implications of The Merge on ETH proof-of-work miners? As Charles Guillemet puts it: “Miners will be replaced by validators that won’t use GPUs to process transactions. For them, this means powering down their rigs, losing a source of income, and bearing the cost of the expensive and potentially useless mining equipment.”

By shifting Ethereum towards Proof-of-Stake, The Merge will also raise new challenges. Fabrice Dautriat, Head of Developer Ecosystem at Ledger, believes that “consensus mechanism replacement is a leap into the unknown in terms of decentralization and game theory. Whether The Merge will bring more decentralization to Ethereum will be watched closely over upcoming months.” 

What are the implications of The Merge for crypto’s carbon footprint? 

While crypto is often criticized for its carbon emissions, The Merge will help the network reduce energy consumption and diminish its carbon footprint by 99%.

Unlike proof-of-work based mining methods, proof-of-stake does not require important amounts of hardware power to perform. Instead, miners can simply put a certain amount of crypto on the network. “This widely used validation method will bring scalability and sustainability and ultimately make Ethereum much more efficient than it is today” Fabrice Dautriat adds. 

For Charles Guillemet, CTO at Ledger, “the Merge will drastically reduce Ethereum’s environmental footprint, making clear that innovations are gradually increasing the crypto industry’s sustainability and proving many critics wrong. With The Merge, crypto is making its own energy transition.”

What does ‘The Merge’ mean for Ledger users?

A complete change of consensus will have a significant impact on the Ethereum ecosystem, but mostly on a technical level. For users, the upgrade should happen seamlessly in the background without any impact on coins, tokens or NFTs. 

Most importantly, your Ledger Nano wallet and Ledger Live app won’t require any action from your side and your funds will remain safe during the entire process. ‘The Merge’ will not result in lower gas fees or faster transactions, and stakers will not be able to withdraw staked ETH immediately after the upgrade. 

Beware of scams! There is no such thing as ETH2 tokens

With the Merge around the corner, so are all kinds of scams. Airdrop schemes, fake tokens, mining pool frauds, you name it.

Here are a few things to keep in mind:

• There is no such thing as ETH2 tokens. There is only ETH (before and  after the Merge)
• No official airdrops have been confirmed by the Ethereum Foundation. 
• Watch out for Twitter accounts named ‘Ethereum support’ that require your personal information or remote access to your computer.

And never, ever share your recovery phrase with anyone.

Stay tuned for upcoming ETH updates

We are currently working hard on implementing the EIP-1559 upgrade to your Ledger Live app. The idea of EIP-1559 is to get rid of the first-price auction and replace it with a fixed-price sale, enabling you to have better estimates and more predictable transaction fees. 

We are also currently looking into Ethereum Name Service (ENS) support. Not only on the Ledger Live interface, but most importantly on your hardware wallet screen. Remember, the trusted display of your hardware wallet is the only secure source of information when validating a transaction. This improvement requires heavy engineering, so stay tuned!

Regarding Ethereum staking, you can already stake your ETH through the LIDO Live App. But we are also looking at other options, either other types of Liquid staking or even native staking through a Ledger in-house solution.

At Ledger we are consistently listening to users’ feedback. And with all the different L2s out there, it was impossible for us to keep our eyes closed. Before the end of the year, we expect our users to be able to manage their Arbitrum and Optimism accounts, as well as many others.

The stage is set

We will continue to offer you the best-in-class support for Ethereum and Ethereum-based assets, backed by the security of your hardware wallets and the ease of use of your Ledger Live app.