The Merge represents Ethereum's monumental upgrade from Proof-of-Work (PoW) to Proof-of-Stake (PoS), enhancing energy efficiency by 99.95% and decentralizing the network further. This transition introduces new staking rewards and reshapes ETH’s economic model.
Key Timeline for The Merge
Expected around September 15th, The Merge’s exact date remains fluid due to Ethereum’s dynamic upgrade process. Post-Merge, stakers will access two reward types:
- Consensus-Level Rewards: Earned via validator activities (attestations/block proposals). These remain locked on the Beacon Chain until future upgrades enable withdrawals.
- Execution-Level Rewards (New): Liquid rewards from block proposals (~6–7 times/year), comprising transaction fees and MEV tips. These are immediately accessible via the staker’s Ethereum address.
👉 Discover how MEV boosts staking APY
Economic Shifts Post-Merge
Dynamic Supply Mechanics
Post-Merge, Ethereum replaces the fixed 2 ETH/block issuance with a supply equilibrium:
- High Congestion: More ETH burnt than issued → deflationary supply.
- Low Congestion: Less ETH burnt than issued → inflationary supply.
Staking APY Projections
Combining consensus and execution rewards, staking APY may reach 7–9%. Increased staking adoption could:
- Reduce market ETH supply → upward price pressure.
- Dilute block proposal chances per validator → lower consensus rewards over time.
Currently, 10.79% of ETH is staked. This figure is expected to grow post-Shanghai upgrade.
Post-Shanghai Upgrade: Flexibility for Stakers
Scheduled for Q1–Q2 2023, Shanghai enables:
- Unstaking: Withdraw validator stakes + consensus rewards.
- Skimming: Isolate consensus rewards for withdrawal.
This eliminates infinite lock-ups, enhancing staker liquidity.
FAQs
When can I withdraw staked ETH post-Merge?
Withdrawals unlock after the Shanghai upgrade (~2023).
How does MEV affect staking rewards?
MEV (Maximal Extractable Value) from block proposals can significantly boost APY, especially during high network activity.
Will Ethereum become deflationary?
Yes, if transaction fees burnt exceed new ETH issuance—common during peak usage.
Why Stake ETH Post-Merge?
Staking offers:
- Higher APY (up to 9%) via dual rewards.
- Energy-efficient validation (PoS).
- Future liquidity via Shanghai upgrades.
👉 Explore institutional staking solutions