In the world of Ethereum, groups of developers, engineers, and so-called “proof-of-stake implementers” come together each week to chat via Zoom. Time after time, call after call, the biggest topic for discussion has been the timeline for the “merge,” a massive years-in-the-making upgrade for Ethereum that will dramatically improve its efficiency while reducing its environmental impact. On the calls, opinions had been split over whether to announce a specific timeline for the merge: a step that would generate buzz and excitement but, given the complexity of the upgrade, could lead to undue pressure and dashed expectations. But, on July 14, the influential Ethereum developer Tim Beiko released an estimated date for the merge: the week of September 19. Ether rallied in response.
When it comes to the merge, the stakes are enormous for the Ethereum community, but they’re not the only ones watching closely. Also keeping a close eye are the so-called Ethereum “killers”—rival blockchains that purport to offer similar features but in a way that is faster and cheaper. For them, a successful merge could undermine some of their claims to be superior, but it could also come to pass that Ethereum’s success boosts the fortunes of the broader crypto world. To get a sense of how competitors see the big event, Fortune spoke to leaders of rivals blockchains that have long used the “proof-of-stake” model that Ethereum is vying to achieve with the merge. Interviews with leaders at Avalanche, Solana, and Tezos revealed that they have distinct thoughts on how the merge will (or will not) affect their projects. But they do share one perspective: All agree that Ethereum’s merge is “long overdue.”
Better late than never?
If the merge succeeds, Ethereum will shift from the energy intensive “proof-of-work” method for validating transactions on the blockchain to the “proof-of-stake” model, which relies on a trusted network of validators instead of brute computer force. A successful shift to proof of stake will dramatically reduce Ethereum’s environmental impact, and pave the way for cheaper and more efficient transactions.
The merge is one of the most ambitious initiatives in blockchain history, and no one is entirely sure it will work. But as the fateful day approaches, Ethereum will have one final dress rehearsal for the upgrade using one of its test networks (testnets), this one known as Goerli.
Testnets are crucial for blockchains, as they’re used by developers to test upgrades before being deployed on the so-called mainnet used by everyone. The testnets are similar to their mainnet variants, and let developers run tests and check for bugs or security holes—preventing such shortcomings from impacting the main blockchain. In the case of Ethereum, its Goerli testnet will undergo the merge and shift to proof of stake between August 6 and 12, serving as a final dry run before the mainnet seeks to achieve the same thing in September.
When it comes to Ethereum’s shift to proof of stake, developers have run through countless tests. Though most view the elaborate warmups as justified given the stakes—a failed mainnet upgrade would be disastrous—Ethereum is also playing catch-up given that most of its competitors were built with proof of stake to begin with.
That’s in part why “the merge is long overdue,” Anatoly Yakovenko, cofounder of Solana, told Fortune. “All the networks that launched over the last three years have been using proof of stake.”
Arthur Breitman, cofounder of Tezos, mentioned the same. “It’s a good thing that it’s moving to proof of stake, but it’s not a huge differentiator today. This is not an accomplishment. Every other blockchain is proof of stake now,” he told Fortune.
Not mincing words, he added, “I would love to get press for something I promised eight years ago.”
Ethereum merge for the greater good?
Some in the crypto space are implacably opposed to proof of stake as a whole, claiming that it isn’t as secure or decentralized as proof of work. Most critics of proof of stake are Bitcoin maximalists, or those who are all in on Bitcoin, a blockchain that depends on proof of work. On the other hand, proof-of-stake supporters see the upcoming Ethereum merge as a positive, citing its environmental impact and their belief that it’s as safe as proof of work.
Though they support proof of stake, Yakovenko and Breitman don’t foresee a massive impact post-merge on the greater space and Ethereum competitors.
“The only impact that I see is that the industry can finally as a whole point to blockchain as an energy efficient way to build Web3,” Yakovenko said, referring to the blockchain-based, decentralized iteration of the internet.
Breitman agrees. But “aside from that, I don’t think it’d be a major shift,” he said, adding that the Ethereum merge and move to proof of stake only feels like a big event because it has been delayed so many times.
To Yakovenko, however, the merge isn’t overhyped, and is important.
“For folks that are not deep in the technical details, it will finally be obvious that proof of stake is as secure as proof of work, but much more energy-efficient,” he said.
Leaders behind other competitors, like John Wu, president of Ava Labs, the company building Avalanche, also see the Ethereum merge as a good thing for the space overall. Wu told Fortune he sees room for all Ethereum competitors with solid utility to grow.
“You have all the variations of ‘Layer 1s’ that will be around for various purposes because their communities and technologies all have slight differences,” he said, adding that each can complement the others. “It’s pretty hard in today’s world to be good at everything, regardless of Web2 or Web3.”
The potential impact of the Ethereum merge on Avalanche will likely be a positive one, Wu said. “Avalanche, obviously, [and also] the ‘Layer 2s’ out there, definitely benefit from Ethereum growing. There is a symbiotic relationship.”
Once Ethereum shifts to proof of stake, and continues to evolve over time alongside its competitors, Wu believes, more institutional investment and mainstream adoption will come.
“I think it will take a while, but it will evolve,” he said.
Long road ahead for ‘Layer 1s’
While most acknowledge its importance, it’s not surprising that Ethereum’s competitors appear to be downplaying the potential impact of the merge—after all, a wildly successful merge could arguably decrease the need for rival blockchains.
Beiko, the prominent Ethereum developer, declined to comment on how the merge might impact other competing chains, as he (and most others in the Ethereum realm) tactfully avoid commenting on other networks. But, he did tell Fortune that Ethereum’s proof-of-stake design today is “the one which can accommodate the largest number of individual validators.”
To him, the merge means a lot for Ethereum: It can expand the amount of participants in the consensus process that validates blockchain transactions, while reducing the amount of energy usage to “almost nothing” and “lay the groundwork” for Ethereum to scale further.
What sets the Ethereum merge apart, Beiko said, is that its proof-of-stake design “allows Ethereum to respond to misbehaving block producers with penalties and slashing, which currently isn’t possible in proof of work or many of the other proof-of-stake networks,” he said, referring to the process of removing a big portion of a validator’s stake—or even ejecting them from the network—if they break the rules of the network and are bad actors. “This extra degree of constraints the protocol imposes leads to higher security and lowered issuance for the Ethereum network.”
Nonetheless, the merge is far from a slam dunk, despite the years of preparation and tests. Along with the possibility of another delay, various issues may arise—like hiccups with clients or software-verifying transactions, and conflicting blocks, among others—that are so complex they can be difficult to plan for. Ethereum developers and engineers are working to be ready for any potential problems, however.
And even if the merge does happen this September and all goes well, Ethereum still has a long road ahead in terms of its development.
Speaking at the Ethereum Community Conference (EthCC) in Paris last week, Ethereum creator Vitalik Buterin said he considers the network to be about 40% complete, and after the merge, “Ethereum can go up to being 55% complete,” he said.
Also on Ethereum’s road map are four other phases happening in parallel that developers are calling the “surge, verge, purge, and splurge”—all of which aim to make Ethereum much more secure and decentralized.
“At the end of this road map, Ethereum will be a much more scalable system…By the end, Ethereum will be able to process 100,000 transactions per second,” Buterin said.
The upshot is that, even if the Ethereum merge goes off without a hitch, it still has a long road until it achieves the speed and efficiency that its boosters say is possible. This means that, for now at least, the Ethereum “killers” still have an opportunity to compete.
Avalanche’s Wu, however, is taking the long view. For both Ethereum and its rivals, he says “there’s still a lot of work to be done for many, many years.”