# The Merge

By [Kanji](https://paragraph.com/@kanjiworld) · 2022-05-03

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Few weeks ago, Ethereum’s testnet “Kiln” merged.

The community seems thrilled about the so-called **Merge**, but what’s “**The Merge**” exactly?

In a nutshell, it’s just an Ethereum upgrade.

Until now, miners were validating transactions by accumulating computing power to be the fastest to find the nonce of the block (**Proof of Work**).

When the Merge occurs, no more miners but validators who put at stake 32 $ETH will be randomly selected to secure the network. (**Proof of Stake**)

The Merge is just the name given to the transition of the Ethereum network from Proof of Work to Proof of Stake - By the way, it should occur between June and September 2022.

🚀 What are the consequences?

*   **About** **90% issuance reduction:**
    
    *   from 4.3% to 0.4% when the Merge happens, Ethereum’s issuance should even become deflationary during periods of high user activity thanks to the burn mechanism (cc EIP 1559). It’s more brutal than 3 Bitcoin halving. Since we all know the consequence of this event on its price, we can expect some following explosive months on $ETH price. I’m looking forward to seeing this news priced in!
        
*   **Around** **99% network operating cost reduction**:
    
    *   Environmental footprint has always been an issue. The Merge will decommission all mining equipment, so no more electricity overconsumption. Crypto will be green! Maybe the end of this exhausting blockchain-is-destroying-the-world \*\*\*\*narrative.
        
*   **Close to a 100% staking yield increase**: from 4.5% to 10-12%/year, according to Coinbase. Staking $ETH will be 20x more interesting than the french average saving account, i.e., Livret A. (Lol)
    

‼️ **But there’s one interesting thing that no one talks about:**

No newly minted Ether will enter circulation between the Merge (June-September) and Shanghai - This is the name of the first Ethereum upgrade post-merge around December.

Why? ETH issuance post-merge will only go to the stakers, whose withdrawals are blocked until the end of the year!

Are we going to experience a liquidity squeeze during this timeframe? When are all those events going to be priced in?

⤴️ Eth price has already increased by 10% since its testnet merged.

Maybe it has already begun...

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*Originally published on [Kanji](https://paragraph.com/@kanjiworld/the-merge)*