Ethereum After the Merge: How Proof of Stake and Layer 2s Shape ETH

Ethereum after the Merge is a different network from the one most people first heard about. On 15 September 2022 Ethereum switched from proof of work, where miners compete with computing power, to proof of stake, where validators lock ETH to secure the chain. The upgrades since then have changed how ETH is staked, how the network scales and how wallets work. This guide explains the changes in plain language and what they mean for anyone trading ETH on SorooshX.

What the Merge changed

The Merge joined Ethereum's original chain to the Beacon Chain, a proof-of-stake chain that had been running in parallel since 2020. Validators replaced miners. Because there is no more mining race, Ethereum's energy use fell by about 99.95%, according to ethereum.org.

What the Merge did not change matters just as much. It did not make transactions faster or cheaper by itself, and staked ETH could not be withdrawn yet. Those came later.

Proof of stake in one minute: Ethereum after the Merge

A validator deposits 32 ETH and runs software that proposes and checks blocks. Honest work earns rewards in ETH; going offline costs a little, and cheating, such as signing two conflicting blocks, gets part of the stake destroyed ("slashed"). Security comes from the value at stake instead of the electricity spent. Most holders do not run a validator themselves; they stake through a pool or a liquid-staking token, which adds a layer of smart-contract and provider risk on top of ETH's own price risk.

The upgrades after the Merge

• Shapella (April 2023): turned on staking withdrawals. Validators can receive rewards automatically or exit and get their ETH back. This made staking less of a one-way door.
• Dencun (March 2024): introduced EIP-4844, a new kind of cheap, temporary data called "blobs". Layer-2 networks use blobs to post their transactions to Ethereum, and their fees dropped sharply.
• Pectra (2025): improved regular wallets so they can batch actions and use features like sponsored fees, and raised the maximum stake per validator.

Why Ethereum scales through layer 2s

Instead of making the main chain do everything, Ethereum's plan is to let layer-2 rollups handle most activity. A rollup executes many transactions off the main chain, then posts compressed data and proofs back to Ethereum, which keeps them secure. For users this means cheap transfers and trades on a layer 2, with Ethereum acting as the settlement layer underneath.

The trade-off: activity and fees spread across many layer 2s, so less fee revenue lands on Ethereum's main chain directly.

What decides ETH's market share

ETH's share of the total crypto market (check it live on CoinGecko) moves with a few forces:

1. Layer-2 growth. If rollups keep attracting users, demand for Ethereum blockspace grows with them.
2. Fee demand and supply. Part of every fee is burned. When activity is high, more ETH is burned than issued.
3. Competition. Faster layer-1s compete for the same apps and traders. See our Solana vs Aptos vs Sui comparison.
4. Institutional access. Regulated products in several countries let funds hold ETH exposure.

Trading ETH after the Merge

ETH tends to move with Bitcoin but with larger swings; read how Bitcoin moves altcoins. On SorooshX you can trade ETH perpetuals long or short from your own wallet. Before you add leverage, check the funding rate and your liquidation price.

Market commentary, not investment advice. Leveraged products can lose more than your margin.