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What are the risks of the Ethereum Merge?

October 16, 2022
in Scams
Reading Time: 2 mins read
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What are the risks of the Ethereum Merge?
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One of the foremost concerns regarding the Merge is that of centralization. Another potential concern is the risk of scams, as the general public may not be aware of how the Merge works.

A fundamental flaw in the Merge is that it will likely increase the concentration of power within the network. The more valuable a staker’s position is, the more they will be rewarded for validating blocks. This could lead to a situation where a small number of wealthy individuals or groups control the majority of the stake and have disproportionate influence over the network.

Five major organizations control 64% of the networks stake. In the event of a contentious fork, these organizations could collude to choose which chain to support, potentially censoring transactions or double-spending funds. Already, critics are debating whether the Merge is a rich get richer; scheme that will entrench the power of current stakeholders.

Since staking will be required to earn interest on one’s ETH holdings, those who cannot afford to stake may be priced out of the market. This could lead to increased centralization as only those with large amounts of money would be able to participate in staking.

Its also not uncommon for scammers to take advantage of big transitions such as The Merge, pretending that users need to do something (usually involving giving up tokens) to upgrade. Wallet upgrades are also a potential source of scams, as users may be tricked into downloading malicious software masquerading as an official update.

Lastly, miners who have been mining in Ethereums mainnet for years may yet decide to continue on Ethereums old chain. After all, many of these miners have likely incurred huge electricity and hardware expenses and may feel that they have more to gain by sticking with the tried-and-true mainnet. 

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This could lead to a split in the community, with two competing versions of Ethereum running concurrently. While this scenario is unlikely, it’s still a possibility that investors should be aware of.

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