Why Ethereum's Merge Was Just the First Step in a Long Efficiency Journey

Proof-of-Stake was table stakes. The Merge's primary achievement was replacing energy-intensive mining with staking, a prerequisite for future upgrades like proposer-builder separation (PBS) and single-slot finality. It did not reduce gas fees or increase transaction throughput.

Scalability remains execution-layer problem. Post-Merge, the bottleneck moved from consensus to execution. This created the market for optimistic rollups (Arbitrum, Optimism) and ZK-rollups (zkSync, Starknet), which handle computation off-chain.

User experience is still broken. High base-layer fees and fragmented liquidity across L2s necessitate complex bridging via Across or Stargate. The next phase, The Surge, directly targets this with proto-danksharding (EIP-4844) for cheaper L2 data.

Evidence: Ethereum's average transaction fee post-Merge remains volatile, often exceeding $10, while rollups like Arbitrum process over 200,000 daily transactions at a fraction of the cost.

Proof-of-Stake was a prerequisite, not a solution. The Merge's primary achievement was slashing energy consumption by ~99.95%. It did not increase transaction throughput or reduce gas fees, which remain bound by the single-threaded execution of the EVM.

The real bottleneck is execution. Ethereum's consensus layer now handles thousands of validators efficiently, but the EVM processes transactions sequentially. This creates a hard cap on blockspace, making gas fees a pure auction for a scarce resource.

Rollups are the execution escape hatch. Protocols like Arbitrum and Optimism bypass this bottleneck by executing transactions off-chain and posting compressed proofs to L1. They demonstrate that decoupling execution from consensus is the scaling path.

Evidence: Post-Merge, average gas fees have not structurally declined. The L2 ecosystem, however, now processes over 90% of user transactions, proving demand shifted to superior execution environments.

The Merge was consensus-layer optimization. It made Ethereum's proof-of-stake consensus more secure and energy-efficient, but it did not increase the network's capacity to process transactions. The fundamental bottleneck of execution on Layer 1 remained.

Rollups are the execution layer. They move computation and state storage off-chain, posting only compressed transaction data and validity proofs to Ethereum. This creates a massive scalability multiplier while inheriting Ethereum's security, unlike sidechains like Polygon PoS.

Optimistic vs. ZK Rollups diverge on trust. Optimistic Rollups (Arbitrum, Optimism) assume transactions are valid, using a fraud-proof challenge window. ZK-Rollups (zkSync, Starknet) use validity proofs (ZK-SNARKs/STARKs) for instant finality, creating a superior trust model but with higher computational overhead.

Evidence: Arbitrum processes 40x more TPS. Ethereum mainnet handles ~15-20 TPS. The Arbitrum One rollup consistently processes over 200 TPS, demonstrating the execution efficiency of moving computation off the base layer.

The Merge was table stakes. It solved Ethereum's energy problem but not its data problem. The core bottleneck remains the monolithic execution model, where a single node sequentially processes all transactions. This design caps throughput regardless of consensus mechanism.

Solana's bet is on hardware. Its monolithic architecture optimizes for single-machine performance using techniques like Pipelining and Sealevel. This approach delivers high throughput now but faces physical scaling limits dictated by Moore's Law and network latency.

The tradeoff is decentralization. Solana's high hardware requirements for validators create a centralizing pressure and operational risk. The network's past outages prove that pushing a single state machine to its limits introduces systemic fragility.

Evidence: Solana's theoretical peak of 65k TPS requires specialized hardware, while Ethereum's modular roadmap (via rollups like Arbitrum and Optimism) distributes execution load across thousands of nodes, trading raw specs for resilience.