Margaux Nijkerk reports on blockchain protocols with a focus on the Ethereum ecosystem. A graduate of Johns Hopkins and Emory universities, she has a masters in International Affairs & Economics. She holds a very small amount of ETH and other altcoins.

Sage D. Young is a tech protocol reporter at CoinDesk. He owns ETH, LINK, AAVE, PEOPLE, OS, and HTR as well as a few NFTs.

As we are entering the final weeks leading up to the Merge, there are only a few more tests left to ensure that Ethereum’s proof-of-work (PoW) protocol transitions smoothly to its Beacon proof-of-stake (PoS) blockchain. The most anticipated event for Ethereum besides the Merge is happening next week; the merge of its third and final test network environment, called Goerli. and the largest community merge.

This article originally appeared in Valid Points, CoinDesk’s weekly newsletter breaking down Ethereum’s evolution and its impact on crypto markets. Subscribe to get it in your inbox every Wednesday.

Goerli is expected to transition to PoS sometime between Aug. 6 and Aug. 12, though this could change depending on how fast the hashrate functions. While many will have their eyes on the September Merge date, this last test will set the stage for what happens on the Ethereum mainnet.

Just last week, Ethereum developers announced the parameters for which the Goerli merge will occur. The test is a two-step process, with the first step happening most likely today or tomorrow (August 3-4). This first step is known as Bellatrix, which is when Goerli’s Beacon Chain, Prater, upgrades in preparation for the testnet merge. Bellatrix will be completed at epoch 112,260. Once Bellatrix is activated, it will next merge with Goerli when it hits a Terminal Total Difficulty (TTD) of 10,790,000. After the two merge, Goerli will continue to run as a PoS blockchain.

But the functions of this merge differ greatly from previous testnet merges. Today, Goerli runs under proof-of-authority (PoA), which is a protocol where machines earn the right to generate new blocks by passing a strict vetting process. As a result, trustworthy validation machines protect PoA blockchains. These system moderators are pre-approved participants who check blocks and transactions.

Given that Goerli is PoA, it will be a lot harder to estimate when the actual testnet merge will happen. On the Ethereum Foundation Discord channel, Tim Beiko, the Protocol Support Lead for the Ethereum Foundation, noted that “it's hard to predict the behavior of the merge” under this type of consensus mechanism. This is because under PoA you can’t ramp up hash power, so the volatility in incremental difficulty per block makes estimating the window for the TTD harder, hence why Ethereum developers have given such a large window for the Goerli merge.

This sort of rough timing estimation will also be the case for the eventual Ethereum mainnet merge. Once we have the clear go-ahead on an end-of-September Merge, we can expect developers to project a long estimated Merge activation window. In true Ethereum fashion, the Merge will happen whenever it happens.

Not only is the upcoming merge different from previous testnet merges Sepolia and Ropsten because of the type of consensus mechanism they use, but it also differs in the way that it will be executed. Sepolia and Ropsten were largely successful, thus giving developers the confidence that the PoW transition to PoS will not endure any big hiccups.

Sepolia is a newer, smaller testnet, with little activity and a permissioned beacon chain. So developers decided to first have a go on Sepolia because it would be easier to transition. Goerli, on the other hand, is one of the largest testnets for Ethereum, with a ton of activity already happening on it. This final testnet will give developers a lot of data on many fronts, and its merge and code will mimic the real performance of Ethereum’s mainnet as closely as possible. The outcome of Prater and Goerli will set the stage for the weeks leading up to the end of September.

But this testnet merge also differs in two other ways. First, the node operators will have to update their Consensus Layer and Execution Layer at the same time, rather than one at a time as was done in previous testnet merges. Second, Bellatrix and Goerli are activated and will merge, which allows for the Goerli chain to continue on. As of now, the Goerli testnet will be part of the Ethereum ecosystem for the long term, even in a post-merge world. Developers will be encouraged to use Goerli testnet when testing new protocols.

While this will be the last testnet to happen before the official Merge, Ethereum developers will use every opportunity it gets to continue to test smaller devnets and shadow forks, leading up to the main event. Ethereum’s Merge has been delayed time and time again in an effort to get the process right, rather than rush through the transition. This approach has allowed developers to safely practice node operations, perform upgrades and backups and remove validators while tackling the complexity and unprecedented move of changing the blockchain mechanism.

Assuming that no issues arise during the Goerli-Prater merge, we can expect the announcement of the parameters, as well as the timeline for the mainnet Merge, to come out soon. This will close the final chapter before the yearslong anticipated event.

There was some talk during a Consensus Layer call that there could be an MEV-boost failure, but Ethereum developers noted that the risk is very low, and they are working at implementing a temporary solution in the meantime..

So buckle up, folks, the final chapters of the pre-Merge era are coming to a close, and then the next phase of a post-Merge Ethereum is around the corner. Of course, this will not be the end of work for Ethereum developers. Their next set of challenges will aim to make Ethereum more scalable and more secure.

Pulse check

The following is an overview of network activity on the Ethereum Beacon Chain over the past week. For more information about the metrics featured in this section, check out our 101 explainer on Eth 2.0 metrics.

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Network Health

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CoinDesk Validator Health


Disclaimer: All profits made from CoinDesk’s Eth 2.0 staking venture will be donated to a charity of the company’s choosing once transfers are enabled on the network.

Validated takes

Ether overtook bitcoin in the options markets for the first time on record.

  • WHY IT MATTERS: At the time of the writing, the cumulative dollar value of open interest in ether options on dominant exchange Deribit was $5.7 billion, or 32% higher, than $4.3 billion locked in open bitcoin options trades. “While some may be uncertain of the outcome of the Merge, at Deribit, we see a lot of post-Merge options open interest being created. Overall, put-call ratio is at a year low, indicating bullish momentum,” said Deribit Chief Commercial Officer Luuk Strijers. Read more here.
  • WHY IT MATTERS: For the first time this year, ether’s market share of trading volume achieved 50% parity with bitcoin’s, according to data provided by Kaiko. “This could be because of FOMO from investors of ETH 2.0 or because there is already a change in tendency,” said Pablo Jodar, financial products manager at Storm Partners. “In the next bull market, maybe we will see a change in market dominance.” Read more here.

Aave user activity rose to a 2022 high.

  • WHY IT MATTERS: Daily active addresses or wallets that made transactions climbed above 1,860 on July 18, IntoTheBlock and CoinMetrics data showed. The activity likely came as users voted on a motion to introduce GHO, Aave’s yield-generating stablecoin. The proposal was passed by the community over the weekend, and as soon as the token is launched, users will be able to mint GHO against a diversified set of cryptocurrencies. IntoTheBlock said in a tweet, “On-chain activity for the $AAVE token is in an up-trend.” Read more here.

After the Merge, Ethereum will only be about 55% complete.

  • WHY IT MATTERS: Despite many perceiving the Merge as the grand finale for the network, Vitalik Buterin shared that Ethereum, post-Merge, will be tackling “the Surge, the Verge, the Purge and the Splurge.” The “Surge” refers to Ethereum introducing systems that will make the network more scalable by enabling the creation of layer 2 products, while the “Verge” will optimize storage and reduce node sizes through the introduction of Verkle trees. The “Purge” aims to reduce, or “purge,” sparse historical data to make the validation process more efficient, and the “Splurge” is described as “the fun stuff” that makes sure the network continues to run smoothly. Read more here.

Ankr released software development kits (SDK) that would allow developers to offer token staking and yield farming to users of their projects and platforms.

  • WHY IT MATTERS: Ankr’s SDKs will be offered on the Ethereum, Polygon, BNB Chain, Avalanche and Fantom networks at first. Once integrated, developers can allow users to stake tokens and earn rewards in return for a liquid staking token. Liquid staking allows users to earn a yield on their locked tokens by issuing new tokens with an equivalent value to the locked ones, freeing up capital. Read more here.

Factoid of the week

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Factoid

Open comms

Valid Points incorporates information and data about CoinDesk’s own Ethereum validator in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post.

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which is:

0xad7fef3b2350d220de3ae360c70d7f488926b6117e5f785a8995487c46d323ddad0f574fdcc50eeefec34ed9d2039ecb.

Search for it on any Eth 2.0 block explorer site!

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Margaux Nijkerk reports on blockchain protocols with a focus on the Ethereum ecosystem. A graduate of Johns Hopkins and Emory universities, she has a masters in International Affairs & Economics. She holds a very small amount of ETH and other altcoins.

CoinDesk - Unknown

Sage D. Young is a tech protocol reporter at CoinDesk. He owns ETH, LINK, AAVE, PEOPLE, OS, and HTR as well as a few NFTs.

CoinDesk - Unknown

Margaux Nijkerk reports on blockchain protocols with a focus on the Ethereum ecosystem. A graduate of Johns Hopkins and Emory universities, she has a masters in International Affairs & Economics. She holds a very small amount of ETH and other altcoins.

CoinDesk - Unknown

Sage D. Young is a tech protocol reporter at CoinDesk. He owns ETH, LINK, AAVE, PEOPLE, OS, and HTR as well as a few NFTs.