https://bmpro.substack.com/p/the-ethereum-merge-risks-flaws-and
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The Merge
On September 15, Ethereum is planning to undergo its long-promised “Merge,” where the protocol will shift from a PoW (proof-of-work) consensus mechanism to a PoS (proof-of-stake) consensus mechanism.
In this report, we will provide details on how the proof-of-stake mechanism works for Ethereum, using technical definitions provided from Ethereum documents. Second, we will evaluate the move to proof-of-stake from first principles, which will include an explanation as to why much of the reasoning for the move is possibly flawed. Last, we will cover the risk factors of the Ethereum PoS mechanism comparing and contrasting the governance to Bitcoin and a PoW consensus mechanism to articulate the fundamental differences between the systems.
This piece was partially inspired by Glassnode’s Lead Analyst, Checkmate’s latest work on Why The Ethereum Merge is a Monumental Blunder.
The Basics
With the shift in consensus mechanisms, Ethereum shifts its block production away from GPU (graphics processing unit) miners over to staking validators.
Validators: “To participate as a validator, a user must deposit 32 ETH into the deposit contract and run three separate pieces of software: an execution client, a consensus client, and a validator. On depositing their ether, the user joins an activation queue that limits the rate of new validators joining the network. Once activated, validators receive new blocks from peers on the Ethereum network. The transactions delivered in the block are re-executed, and the block signature is checked to ensure the block is valid. The validator then sends a vote (called an attestation) in favor of that block across the network.” - Ethereum.org
Validators take the role of block production away from miners, and importantly, transfer the power structure away from real world energy input (in the form of hashes) towards capital, in the form of staked ether.