Popular ETH Merge Trades Explained

Since its inception, a transition from proof-of-work (PoW) consensus to proof-of-stake (PoS) consensus has been in Ethereum’s roadmap. While the scaling roadmap has undergone several pivots through many phases of iteration over the past few years, there is currently general consensus support for a rollup-centric scaling roadmap using the beacon chain as a coordination layer and PoS shard chains as a data availability layer. While the rollup space continues to mature, the next major milestone towards this vision is converting the Ethereum network to PoS consensus by hot swapping of the protocol’s consensus mechanism through a process referred to as “the Merge.” 

The roadmap for an eventual PoS transition has also always included plans to help ensure a graceful handover from the PoW chain, the oldest and most well-known being the “difficulty bomb.” Introduced with the Frontier hard fork in 2015, the difficulty bomb essentially serves as a PoS deadline past which PoW blocks can no longer be mined. Initially set to trigger in late 2017, it has since been delayed several times (see Figure 1 below) and is currently projected to finally reach terminal difficulty on September 15th.