This event means Ethereum is one more step closer to a full merge when its PoS Beacon Chain, still under testing, will merge with the PoW execution to create a full PoS Ethereum blockchain.
Originally, just like Bitcoin, Ethereum was just a Proof-of-Work (PoW) blockchain, but introduced a PoS Beacon Chain on December 1, 2020 with about 9,500,000 ETH ($37 billion in current value) already staked.
This testnet would function just like the Ethereum merge and it would give the community practical insight on how it would work.
Here are some of the highlights from the testnet:
Sepolia will be the second of 3 public testnets to run through The Merge
The network will transition to PoS when the total difficulty on the PoW chain exceeds 17,000,000,000,000,000, which is expected to occur around in the next few days
Post-merge, Sepolia will have a permissioned validator set, like existing proof-of-authority testnets. Goerli/Prater, which will merge at a later date, will maintain an open validator set to allow for stakers to test the transition
Sepolia’s dress rehearsal is necessary to ensure the upgrade works properly on all testnets before it goes live on mainnet in early August 2022, if all goes according to schedule. This however is unlikely due to several postponements by the Ethereum team.
The Merge was initially scheduled for June 2022. However, the ETH development team announced postponement. Ethereum has decided to delay the ‘difficulty bomb’ for about 2-3 months. Once this bomb is activated, it will make the miners switch to the Proof-of-Stake (PoS) transaction validation mechanism.
The difficulty bomb is a mechanism put in place to gradually dis-incentivize Ether (ETH) miners from proof-of-work (PoW) mining on Ethereum ahead of the network’s eventual merge with the PoS-based Beacon Chain. This is done by increasing the difficulty level of puzzles in the PoW mining algorithm, thus resulting in longer block times and fewer ETH mining rewards.
The mechanism would also make the Merge significantly more complicated for devs to complete due to its gradual slowing of block-creation.
After Sepolia, only Goerli/Prater will need to be merged before fully moving to the Ethereum 2.0 mainnet.