What Is Ethereum, and What Changed With the Ethereum Merge?

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Last updated: 16 October 2026 · By Spencer Li, CFTe

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Ethereum is a public blockchain that runs programs as well as payments. Its currency is ether (ETH), and developers use it to build apps, tokens and financial services that run without a company in the middle. The Merge, on 15 September 2022, switched how Ethereum is secured, from mining (proof of work) to staking (proof of stake). It cut the network’s energy use by about 99.95% and new ETH issuance by about 88%. It did not lower fees, and it did not touch anyone’s balance.

Those are the headline facts. Each one is quoted below from ethereum.org, the project’s own documentation, read on 16 October 2026.

In this post, I’m going to cover what Ethereum is, what the Merge actually changed, what it did not change, and the 3 myths about it that still circulate.

What is Ethereum?

In ethereum.org’s own words, “Ethereum is a decentralized blockchain network and software development platform, powered by the cryptocurrency ether (ETH).” It describes Ethereum as “an open, public blockchain launched in July 2015 by a software developer called Vitalik Buterin and a small team of co-founders.” The idea came first, in a 2013 white paper.

The difference from Bitcoin is the “software development platform” part. Bitcoin is built mainly to move one currency. Ethereum is built to run small programs, called smart contracts. Ethereum.org’s metaphor is a vending machine, where “specific inputs guarantee predetermined outputs.” Put in the right amount, and the machine hands over the item, with no shopkeeper needed.

Every action on Ethereum costs a small fee. Ethereum.org says you “pay a small transaction fee (or gas fee) in ETH,” which “helps prevent spam and rewards the people called validators who process transactions.”

What was the Ethereum Merge?

Ethereum.org sums it up: “The Merge was executed on September 15, 2022. This completed Ethereum’s transition to proof-of-stake consensus, officially deprecating proof-of-work and reducing energy consumption by ~99.95%.”

The name comes from how it was done. For almost 2 years, Ethereum ran 2 chains side by side. The original one, secured by miners, held everyone’s balances and transactions, while a second one, the Beacon Chain, was launched on 1 December 2020 so that proof of stake could run in parallel before anything depended on it. In ethereum.org’s words, the Merge was “the joining of the original execution layer of Ethereum… with its new proof-of-stake consensus layer, the Beacon Chain.”

The usual comparison is swapping a plane’s engine in mid-flight. The passengers and the luggage stayed exactly where they were. Only the thing keeping the plane in the air changed.

If proof of work and proof of stake are new terms, proof of work versus proof of stake explains both.

If you want a daily routine for trading what you understand, the free 15-Minute Swing Trader’s Checklist is at the end of this post.

What actually changed with the Merge?

4 things, each with a number attached:

The issuance change is the one that matters most to holders. Ethereum.org says new issuance dropped “by ~88%”. On top of that, part of every transaction fee is destroyed, a rule that went live with the “London upgrade in August 2021”. Ethereum.org notes that when the average fee is at least 16 gwei for a day, the amount destroyed “effectively offsets the ~1,700 ETH that is issued to validators”. On those days, the total supply does not grow.

So unlike bitcoin, ether has no fixed cap. Ethereum.org calls it “a dynamic supply. New ETH is issued to reward validators, while a portion is burned with every transaction.”

There was a security change too. Proof of stake added the idea of finality. Ethereum.org says that undoing a finalised block “would require obtaining and burning over one-third of the total staked ETH.”

[INFOGRAPHIC: Ethereum before and after the Merge, 2 columns, miners versus validators, about 13,000 versus 1,700 new ETH a day, energy down about 99.95%, fees unchanged]

What did the Merge not change?

This is where most of the confusion sits, so here are the 3 myths, each answered by ethereum.org.

Myth 1: The Merge made Ethereum cheaper to use.

It did not. Ethereum.org is blunt: “The Merge was a change of consensus mechanism, not an expansion of network capacity, and was never intended to lower gas fees.” Fees still rise and fall with demand.

Myth 2: You had to do something with your ETH.

You did not. “Any funds held in your wallet before The Merge are still accessible after The Merge. No action is required to upgrade on your part.” Anyone who told you to send your coins somewhere to “upgrade” them was running a scam.

Myth 3: History was rewritten.

It was not. “No history was lost in The Merge. As Mainnet merged with the Beacon Chain, it also merged the entire transactional history of Ethereum.”

A related point is staking withdrawals. The Merge did not let stakers take out their ETH. Ethereum.org says those withdrawals “have since been enabled via the Shanghai/Capella upgrade.”

What does the Merge mean for you?

Personally, I find the Merge a useful case study in how crypto networks change. Ethereum’s rules were rewritten in public, years in the making, and the switch happened without a pause. It proved a network can upgrade its core while it keeps running, and it also proved that the rules you bought into can be changed later by the people who maintain them.

For a trader, 3 things follow. The energy argument against Ethereum mostly fell away, and the supply story changed, because whether ETH grows or shrinks on a given day now depends on how busy the network is. And staking became central, which brings its own risks, covered in staking vs yield farming vs liquidity mining.

None of this tells you where the price of ETH goes next. A network can work exactly as designed while its coin falls a long way.

For the bigger picture, the blockchain and cryptocurrencies guide maps the topic, and dApps and DAOs explained covers what people actually build on Ethereum.

So which change matters most to you, the lower issuance or the lower energy use? And did you hear any of the 3 myths at the time?

FAQ

What is the Ethereum Merge in simple terms?

On 15 September 2022, Ethereum switched from miners to validators who lock up ETH. The balances and history stayed the same, and energy use fell by about 99.95%.

Did the Ethereum Merge reduce gas fees?

No. Ethereum.org says the Merge “was never intended to lower gas fees.” Fees still depend on how busy the network is.

Is there a maximum supply of ETH?

No. New ETH is issued to validators, and part of every fee is burned. On busy days the burn can match or exceed new issuance.

Do I need to do anything with my ETH because of the Merge?

No. Ethereum.org says no action was required. Anyone asking you to send ETH to “upgrade” it is a scammer.

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About the author. Spencer Li is the founder of Synapse Trading and a Certified Financial Technician (CFTe). His trade log is public: every trade since April 2024, dated, losses left in.

Educational content only, not personalised financial advice. Trading carries risk, including loss of capital. Past performance is not indicative of future results. Synapse Trading is not licensed or regulated by MAS.

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