Did Ethereum merge solve the Blockchain Trilemma?
Tags: ethereum, blockchain
Published: 2023-01-10 01:43:17


In this blog post we will take a look at 
•	What Ethereum is
•	How it’s different from Bitcoin 
•	The recent Ethereum Merge
•	Does it solve the Blockchain Trilemma?

What is Ethereum? What is Ether? What are dApps? What is Solidity? What is the EVM? 
Ethereum is a peer-to-peer platform where users write code to develop applications and control money without the presence of a third party, created by Russian-Canadian programmer Vitalik Buterin in 2015 with an initial supply of 72 million Ether (the platform’s currency, or fuel).
It is designed to be a flexible, modular, and general-purpose blockchain platform, with a focus on enabling the development of Decentralized Aplications (dApps) by that I mean open sourced aplications that are not controlled by a single entity or authority.  
To achieve this, Ethereum has a built-in programming language, Solidity, which allows developers to write and deploy smart contracts on the Ethereum platform through the use of a virtual machine, The EVM provides a run-time environment for smart contracts to run on top of the Ethereum network.
What are Smart Contracts?
Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. Think of these as electronic vending machines - programs that automatically execute when certain conditions are met.
This enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have not been invented yet, all without a middleman or counterparty risk.
They typically are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary's involvement or time loss.
What are Gas Fees? 
Are these Smart Contracts Free? No they are insanely expensive. The Ethereum network charges you a gas fee, payed in Ether its native currency. This gas fee is used to pay for the computation time needed to run smart contracts on the Ethereum Virtual Machine (EVM) These don’t have a fixed price, they are bids and fluctuate depending on the networks demand. 
How is it different from Bitcoin?
As the world’s biggest programmable blockchain, Ethereum is like Bitcoin in some ways.
•	It’s also an open sourced decentralized platform through which users can connect with each other and exchange crypto-currencies and new applications without governments or corporations controlling the infrastructure. 
•	Both used a proof of work consensus algorithm (Add titles as of this date Eth uses PoS)
•	Both produce their own crypto-currency, 
But unlike Bitcoin that was created solely to enable online transactions without the need for a central authority. Ethereum, was designed to be a decentralized platform that runs smart contracts.
Think of Bitcoin as a Desktop App for money transfers, and Ethereum ir more like an App Store, of Bitcoin like applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference. 
Does Ethereum solve the Blockchain Trilemma?
The ‘blockchain trilemma’ described the challenges developers face in creating a blockchain that is decentralized, scalable and secure, without compromising on any element. Blockchains are forced to make trade-offs that prevent them from achieving all three aspects. It is said that whichever blockchain project achieves an ideal balance of all 3 will win it all. 
Needless to say Ethereum does not currently have a great balance of these 3 traits. Since its inception seven years ago, the Ethereum blockchain has grappled with security and scalability issues.  
Smart contracts are the foundational blocks of web3. They enable applications built on top of blockchains and power DeFi, NFTs, DAOs, and any other decentralized solutions you can think of. Since smart contracts are the cornerstone of blockchain applications, when they fail, the applications built with those contracts fail, and the entire ecosystem suffers.
Lacking Security - The DAO Hack?
DAO, launched in 2016 was an early decentralized autonomous organization (DAO) intended to act as an investor-directed venture capital firm. 
The DAO raised $150 million USD worth of ether (ETH) and was one of the earliest crowdfunding efforts and high-profile projects built on the Ethereum blockchain — which at the time was only one year old. Less than three months after its launch, The DAO was hacked and $60 million of ether was stolen. 
The Ethereum community debated heavily on how to respond to the attack. The DAO’s failure would not only mean financial loss for investors, but it also bore dire repercussions for the nascent Ethereum network who was planning on moving to a Proof of Stake system. The Ethereum blockchain ended up issuing a hard fork of the project to restore the stolen funds, and stop the hacker from having an unfair power over the future network. 
So now there is an Ethereum classic (The version where the Hacker still has those stolen funds) and Ethereum the Hard Forked network. The situation not only presented technical challenges, but questioned the moral and philosophical underpinnings of the technology — and the resilience of the Ethereum project’s leadership. smart contracts are only as secure as their underlying blockchain platform
Ethereums Scalibility Issues
Besides Security the Ethereum blockchain has an inherent scalability issue, which limits it to around 30 transactions per second. Network congestion arising from the sheer volume of transactions often results in delays and skyrocketing fees.
Gas fees are simply bids for including a set of transactions in the limited block space. In case of high demand, these bids go up as users attempt to fast-track their transactions to gain an edge. This results in extremely high transaction costs. Vitalik Buterin claims that Ethereum's gas fees should be around $0.05, ideally. During the DeFi boom and the gas wars that followed, average gas fees on Ethereum soared to around $70 and some even reaching the thousands.
Ethereum 2.0 - What is Proof of Stake?
Theses issues have been plagging Ethereum for years but as of the date of September 15 2022, the long-awaited software revision, termed the Merge, was complete. This update shifted the blockchain from a so-called proof-of-work system to a more energy efficient proof-of-stake method for securing the network.
Proof-of-work (PoW) and proof-of-stake (PoS) are two different consensus algorithms.
In a proof-of-work system, miners compete to solve a cryptographic puzzle in order to create a new block and earn a reward. This process requires a significant amount of computing power, and the miner that is able to solve the puzzle and create the new block first is able to add it to the blockchain and claim the reward. The key feature of PoW is that it requires miners to perform a certain amount of work in order to create new blocks and earn a reward.
In a proof-of-stake system, the creator of a new block is chosen in a deterministic way, depending on their stake in the network. The stake can be thought of as the amount of cryptocurrency that a validator holds or has "locked up" in the network. The higher the stake, the higher the probability that a validator will be chosen to create the next block. In PoS, the validator is not required to perform any computational work, but they do have to show ownership of a certain number of tokens in order to participate in the validation process.
This model, some argue, reduces the possibility of a 51% attack because it makes an attack more costly. Adding security to the Network and reducing its energy consumption. 
The new arrangement has phased out the miners, replacing them with validators who staked Ether (ETH). More centralization fears have emerged as institutional capital and large exchanges vie for a large chunk of ETH staking power.
The ultimate aim for all these upgrades is to make Ethereum more scalable, faster and cheaper to use.
Does the Merge Fix Ethereum?
Even thought Ethereum has made significant progress in improving its scalability and security through the implementation of various upgrades, it is still broken.
Completing the upgrade without any software downtime is a brilliant engineering feat, but there was no changes related to network crazy high transaction costs or crippling low speed. These are set to be fixed I future updates. 
The Merge was the first step toward a series of upgrades on Ethereum to solve the scalability trilemma.
•	The second step called the surge: Implementation of sharding, a scaling solution which will lower the cost of bundled transactions on Ethereum.
•	The third step named The Verge: Introduction of ‘verkle trees,’ an update which will make the network more decentralized by making it easier for users to become validators.
•	The fourth Step named The Purge: Elimination of historical data and technical debt.
•	The last step The Splurge: Miscellaneous updates after the first four stages to ensure smooth functioning of the network.

Its estimated that these following steps will happened in around 3 more years. 

Conclusion

So we saw What Ethereum is, how its different from Bitcoin, its current limitations and future plans to fix them. 
Over the next years, we should see how Ethereum performs as a Proof-of-Stake network with full sharding abilities. In the meantime, no one can discard the sudden emergence of a qualified player to (either temporarily or permanently) contend for the top spots in Layer-1 adoption.

As a Blockchain developer you should definitely learn Solidity and have some experience working in the Ethereum platform. 
If you have any questions, please let me know in the comments below.