Conclusions

• The Merge has had positive and negative influences on the network. Based on the analysis above and the metrics used, the overall impression is that the Merge has been positive on the network.
• Network speed - as captured by the average time interval between blocks - has increased around 14% post-Merge.
• The network has become more decentralized as the top 20 miner/validator accounts for fewer blocks produced post-Merge as compared to the case pre-Merge.
• The burn rate of ETH has not changed pre- and post-Merge, likely due to low gas fees (and network usage). As demand for block space increases, the base fee will also go up, and it is hoped that this situation will then create a deflationary Ether in the future.

Introduction

The Merge describes the full transition of the Ethereum mainnet from a proof-of-work to a proof-of-stake consensus mechanism. This was a largely anticipated event that occurred on 15 September – having been delayed for several years due to technical difficulties with making the transition. Several proposed benefits of the proof-of-stake mechanism include reduced ETH issuance, increased network scalability and less centralization due to proof-of-stake.

In this analysis, we will address three facets of Ethereum post-Merge that aim to answer whether the Merge has had a positive or negative influence on the network as a whole.

Methods

The following analysis uses the following table:

• ethereum.core.fact_blocks
• ethereum.core.fact_transactions

The time period for this analysis is restricted to the time period around the time of the merge (i.e. from 1st September 2020 onwards), unless otherwise specified.

The 3 features of the Ethereum network that were examined in this analysis are:

1. network scalability - captured by a metric around the average interval between blocks
2. centralization - analyzed by looking at the proportion of blocks produced by specific validators/miners
3. ETH’s burn rate - analyzed by looking at the proportion of transaction fees that have been burnt

The post-Merge was defined as the time period after block number 15537351, while the pre-Merge period is the time period before this block number.

To calculate the proportion of blocks produced by the top 20 miners/validators, I normalized the number of blocks produced by each miner/validator by dividing this number with the total number of blocks produced within the analyzed time period.

The burnt ETH - i.e. the amount of ETH that is burnt as part of EIP-1559 - is calculated by base_fee_per_gas*gas_used. To calculate the proportion of the transaction fee that is burnt, the formula base_fee_per_gas*gas_used/total_transaction_fee was used.