No, “ETH 2.0” will NOT reduce transaction fees

First of all, Eth 2.0 does not exist. It is named “The merge” and is the second of 3 Ethereum upgrades. “The merge” and “Shard chains” are yet to come out. The first upgrade, “The beacon chain” is currently live.

The most common misconception on this subreddit is that when eth 2.0 comes out, transaction fees will be lower or even non-existent. That is completely false.

The upgrade will have an impact on the consensus layer. Gas fees are paid on the execution layer of Ethereum. So, unfortunately, gas fees will not be cheaper and we must stop having wrong expectations.

More activity on Ethereum blockchain = higher fees

Less activity on Ethereum blockchain = lower fees

Those fees that you are paying now will simply go to staking Ethereum instead of miners as it does currently.

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What the merge WILL do, is make Ethereum eco-friendly. The transition to proof of stake makes the network 2000 times more energy-efficient, requiring 99.5% less energy to process transactions.

Security will be better, and the merge will most likely have a positive influence on ETH price as staking is encouraged. In the transition to POS, fewer Ether tokens will be minted thus lowering inflation.

For comparison, ETH is staked at around 8.3%, while ADA is at 73%, so there is huge space for upside.

All in all, still bullish on Ethereum

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29 thoughts on “No, “ETH 2.0” will NOT reduce transaction fees”

  1. >More activity on Ethereum blockchain = higher fees
    >
    >Less activity on Ethereum blockchain = lower fees

    Yep, it’s that simple but people like to overcomplicate things

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  2. True, ETH 2.0 does not exist, but Eth2 does. Eth2 is the consensus layer which handles the proof of stake consensus. After merging Eth1 which is handling the transactions and execution and Eth2 into a single chain, there will no longer be two distinct Ethereum networks; there will only be Ethereum.

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  3. What?! They lied to me then.

    But seriously, whoever is in crypto and doesn’t already know this I’m sad for them

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  4. Is the huge efficiency gain most reflected in the cost of ETH transactions (and therefore a component of fees)? If not, who bears this cost now?

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  5. It’s kind of crazy how many people still believe the merge will reduce gas fees by any meaningful amount.

    You even see some news outlets reporting it.

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  6. What you’re saying is 100% correct but blocktime is going down from an average of ~13.2seconds to 12 seconds (~8% faster). This means the throughput is slightly increasing which could result in a slight decrease in gas fees (about 8%). This probably won’t be noticeable though because of how much activity fluctuates during the day/week.

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  7. I see your point, and yet I believe you’re wrong.

    The high fees are due to saturation of the network, you bid higher to get approved faster.

    Sharding will make transactions time much faster, which leads to less saturation, there is also no need to bid higher since it’s POS and the fees are probably fixed or at least stable as in other POS chains.

    And btw, since your network is much cheaper to operate, it’s just logical that validators earn less fees.

    I’m far from being expert in this, so take my word with a pinch of salt.

    Also would love to hear more opinions

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  8. For the people who care about fees, it is the biggest problem ETH has, and should be the primary issue being solved right now. So, when they hear ETH 2.0, of course they are going to think and want it to reduce fees. The line of thought is “Why would you be working on anything else with such a huge problem going on for so many months now?” ie People *want* ETH 2.0 to reduce fees, because that’s the biggest issue ETH has.

    More activity on Ethereum blockchain **should not** mean ridiculous fees. If it does, then the product is flawed and needs to be fixed. The fees are magnitudes higher than they should be and magnitudes higher than other cryptocurrencies during busy times. Sure, it’s acceptable that more traffic should require more fees, but in the range of pennies, certainly not tens of dollars.

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  9. There is a simple reason for fees remaining the same. The greater the demand for Ethereum, the pricier gas fees become.

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  10. So you are saying fee will be more expensive as you think the fee structure remains the same and the merge has positive influence on ETH price

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  11. Had to try and explain this to a coworker who believed the lower gas fees will make the price of ETH skyrocket. He didn’t believe me that the upgrade has no direct influence on gas fees

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  12. >The transition to proof of stake makes the network 2000 times more energy-efficient, requiring 99.5% less energy to process transactions.

    Nodes validating transactions doesn’t have any significant energy cost. It’s incorrect to correlate the energy required for mining with the energy required to process transactions

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  13. > staking is encouraged

    The thing stopping me staking is the super high minimum requirement, not eco friendliness. Is that being removed? If no: why/how would it significantly encourage staking?

    Reply

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