The journey of Ethereum, from its conceptualization to becoming a cornerstone of blockchain technology, is filled with pivotal moments and key collaborations. One such moment was the historic "Merge," which not only marked a significant milestone for Ethereum but also set a new course for the entire blockchain ecosystem.
On September 15, 2022, Ethereum underwent its most critical upgrade since the mainnet launch in July 2015—the transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS). This shift, known as "The Merge," was a transformative event designed to enhance scalability, security, and sustainability.
The Impact of The Merge
The Merge brought several groundbreaking improvements to the Ethereum network:
- Energy consumption reduced by an estimated 99%, addressing long-standing environmental concerns.
- ETH issuance decreased by approximately 90%, creating a more deflationary economic model.
- Gas fees, through the implementation of sharding and Layer 2 solutions, trended toward zero, making transactions more affordable.
- Network performance was set to scale dramatically, with targets of 10,000 transactions per second (TPS) within three years and 10 million TPS within a decade.
These enhancements solidified Ethereum’s position as a foundational infrastructure for the decentralized web, including applications in the metaverse and decentralized finance (DeFi).
The Naming of the "Shanghai" Upgrade
Following The Merge, Ethereum’s next major upgrade was dubbed "Shanghai." This name pays homage to the city where the third Ethereum Developer Conference (Devcon2) was held in September 2016. Organized by Wanxiang Blockchain Labs, the event attracted nearly a thousand attendees, 90% of whom traveled from overseas. It played a crucial role in popularizing blockchain technology in China and fostering global collaboration.
Early Encounters and Collaborations
My first interaction with Vitalik Buterin, the founder of Ethereum, occurred indirectly through a mutual contact, Shen Bo. In December 2014, during a digital currency forum organized by Caixin Magazine in Sanya, I delivered a speech focusing on Ethereum, which had released its whitepaper a year earlier. Shortly after, Shen Bo connected us while he and Vitalik were at Incheon International Airport in South Korea.
Vitalik’s First Visit to Shanghai
In April 2015, Vitalik visited Shanghai for the first time. I was impressed by his ability to communicate in basic Chinese, which he had learned by studying translated versions of blockchain documents, including the Bitcoin and Ethereum whitepapers. During his stay, he lived with Shen Bo and immersed himself in discussions about Ethereum’s future.
Supporting the Ethereum Foundation
During one meeting, Vitalik appeared visibly tired due to ongoing concerns within the Ethereum community about the foundation’s financial sustainability. Developers were worried whether there were sufficient funds to support the project until the mainnet launch.
Recognizing the historic potential of Ethereum, I proposed that Wanxiang Blockchain Labs donate $500,000 to the Ethereum Foundation. This donation was intended to alleviate financial pressures and ensure developers could focus on building the network. The agreement included a clause for Wanxiang to receive a certain amount of ETH after the mainnet launch.
This gesture not only stabilized the community but also marked the beginning of Wanxiang’s strategic push into blockchain technology.
Building the Ecosystem
With the Ethereum project backed, Wanxiang Blockchain Labs launched several initiatives to foster blockchain adoption:
- Establishment of Wanxiang Blockchain Labs in late 2015.
- Inauguration of the annual Wanxiang Blockchain Global Summit.
- Creation of Distributed Capital, the first blockchain-focused investment fund in Asia.
- Publication of educational materials and organization of training programs for developers.
The first Wanxiang Blockchain Global Summit, held in October 2015, featured leading global experts and was instrumental in promoting blockchain technology in China. The event included both open forums and closed-door discussions, attracting widespread participation from industry pioneers.
Expanding Reach Through Events
In May 2016, a delegation including myself and Vitalik embarked on a global tour to explore blockchain innovations in Silicon Valley, New York, and London. This trip aimed to identify speakers for the upcoming blockchain summit and strengthen international ties.
Later that year, the second Wanxiang Blockchain Global Summit expanded into a week-long event, incorporating Devcon2, project demos, and expert panels. This expansion was made possible by Wanxiang’s continued support for the Ethereum ecosystem.
The Future of Blockchain Protocol Stack
The Merge represents more than just a technical upgrade; it signifies Ethereum’s evolution into a multi-layered protocol stack. Similar to the early internet, which consolidated around TCP/IP, blockchain technology is moving toward integrated protocols:
- Layer 0 (distributed communication, storage, and computation).
- Layer 1 (base blockchain layer).
- Layer 2 (scaling solutions like rollups).
- Layer 3 (application-specific chains).
This layered approach enables interoperability, scalability, and efficiency, positioning Ethereum as the backbone of Web3.
Other public chains may eventually integrate as sub-chains or sidechains of Ethereum, creating a seamless and interconnected blockchain ecosystem.
Frequently Asked Questions
What was the significance of The Merge?
The Merge transitioned Ethereum from Proof-of-Work to Proof-of-Stake, reducing energy consumption by 99% and setting the stage for higher scalability and lower transaction costs. It was a landmark event for both Ethereum and the broader blockchain industry.
How did Wanxiang Blockchain Labs support Ethereum?
Wanxiang provided critical financial support during Ethereum’s early development phase, donating $500,000 to the Ethereum Foundation. This helped ensure the project’s continuity and fostered long-term collaboration.
What is the Shanghai upgrade?
The Shanghai upgrade is Ethereum’s first major update following The Merge. It focuses on enabling staked ETH withdrawals and improving network efficiency. The name honors Shanghai’s role in hosting key Ethereum development events.
How does Ethereum’s layered approach work?
Ethereum’s protocol stack includes Layer 1 for security and decentralization, Layer 2 for scaling, and higher layers for application-specific needs. This structure supports high throughput and flexible development.
What role did Vitalik Buterin play in Ethereum’s growth?
As Ethereum’s founder, Vitalik provided visionary leadership and technical expertise. His ability to engage global communities and drive innovation was instrumental in Ethereum’s success.
How can developers contribute to Ethereum’s ecosystem?
Developers can build decentralized applications, contribute to core protocol improvements, or participate in community governance. 👉 Explore development resources to get started.
Conclusion
Ethereum’s journey from a whitepaper to a global protocol stack is a testament to collaboration, innovation, and strategic support. The Merge and subsequent upgrades like Shanghai represent milestones in this ongoing evolution. As the ecosystem continues to grow, Ethereum remains at the forefront of blockchain technology, enabling a decentralized and interconnected digital future.