Introduction
Ethereum successfully completed its historic transition from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) consensus mechanism. This shift, known as "The Merge," represented the realization of a foundational goal set by Ethereum's creators. The event unfolded with remarkable technical smoothness. Competing forks like ETC and ETHPOW failed to gain significant traction, collectively representing less than 4% of Ethereum's market capitalization. Meanwhile, regulatory scrutiny emerged immediately, with the U.S. SEC suggesting that staking under PoS could bring cryptocurrencies under securities laws. This is a chronological breakdown of the pivotal events that defined the first day of a new era for Ethereum.
A Timeline of Key Events
The Final PoW Block and First PoS Block
At 14:43 on September 15, the NFT project VanityBlocks minted "The Last POW Block" NFT on Ethereum's final Proof-of-Work block. The transaction included a quote from ethnobotanist Terence McKenna: "Once you make a commitment, the world will help you remove all impossible obstacles. Go and complete the unfinished dream. The universe will never suppress your progress. This is the mystery."
Shortly after, the new Ethereum network produced its first Proof-of-Stake block (height 15537394), validated by 0xeee27662c2b8eba3cd936a23f039f3189633e4c8. HashKey Capital marked the occasion by inscribing a memo in this first block: "Supporting Next Generation Blockchain Innovation." Network activity surged, causing gas fees to spike briefly to 108 gwei.
Leadership Comments and Market Reactions
In the final minutes before The Merge, Ethereum co-founder Vitalik Buterin stated that the event would reduce global electricity consumption by 0.2%. Following the successful transition, he proclaimed it a significant milestone for the ecosystem, noting that everyone involved should feel a sense of pride.
By 15:00 UTC, hashrates on alternative PoW networks saw dramatic increases as miners migrated. ETC's hashrate jumped 55.17% to 92.48 TH/s, while RVN and CFX saw increases of 35.463% and 55.74%, respectively.
Trading markets began to adjust. By 15:30, the funding rate for ETHUSDT perpetual contracts on Binance, which had been deeply negative at nearly -0.5% before The Merge, recovered to around -0.24%. This indicated a reduction in short positions and hedging activity. Simultaneously, borrowed ETH on Aave was being repaid, lowering the protocol's utilization rate below 75%.
Exchange Resumption and Fork Support
At 16:00 UTC, major exchanges like Binance and FTX resumed deposit and withdrawal services for Ethereum mainnet tokens. All major DeFi and NFT protocols were confirmed to be operating normally without disruption.
By 21:00 UTC, Poloniex, led by Justin Sun, announced its support for the EthereumFair (ETF) fork, a chain supported by a segment of the community and miners, distinguishing it from the ETHPOW fork promoted by other figures. BitCoke followed suit, announcing that all its mining hardware would switch to mining the ETF chain, with spot trading pairs launching after system maintenance.
Miner Migration and New Chains Go Live
Ethan Vera, COO of Luxor mining pool, provided a snapshot of miner activity at 21:40 UTC. With rising difficulty on networks like ETC and RVN, competition was lowering potential rewards for miners. He estimated that 20-30% of former Ethereum miners had migrated to other networks, while the remainder had shut down their equipment temporarily.
Exchanges including FTX and Bybit listed the EthereumPoW (ETHW) token. At 22:06 UTC, the ETHW team announced its mainnet was live, publishing key network information like RPC URLs and Chain ID. F2Pool launched a dedicated ETHW mining pool and transferred its leftover ETH hashrate to the new network, which supports GPU and ASIC miners using the Ethash algorithm.
Price Movements and Next Morning Analysis
By 23:05 UTC, the price of ETH had dipped below $1,500. The newly launched ETHW token was trading at $16.94.
By 08:00 UTC on September 16, the mining landscape had begun to stabilize. ETC's hashrate settled at 270 TH/s, down from a peak of 300 TH/s, with a price of $35.93. ETHW's hashrate was 59.87 TH/s with a price of $13.20. The ETF chain had a hashrate of 35 TH/s and a price of $17.33. Combined, the forked chains represented about one-third of Ethereum's former hashrate and only 4% of its market capitalization.
Regulatory Attention and Staking Concerns
The Wall Street Journal reported that SEC Chairman Gary Gensler had commented on the change. He stated that the move to Proof-of-Stake could mean that the asset falls under securities laws. Gensler suggested that cryptocurrencies allowing holders to "stake" their tokens, and the intermediaries offering these services, might need to pass the Howey Test to determine if they are securities. He drew parallels between staking services and lending.
A Shift in Network Control
By 09:00 UTC on September 16, the distribution of Ethereum's staking nodes was clear. Lido dominated with 30% of staked ETH, followed by centralized exchanges: Coinbase (14%), Kraken (8.3%), and Binance (6.5%). This contrasted with the prior PoW mining pool distribution, where Ethermine held 28.9%, F2pool 14.5%, and Hiveon 10%. While the overall level of centralization was similar, the concentration of power had shifted toward U.S.-based exchanges.
For those looking to understand the implications of staking on network participation and security, it's a pivotal area to watch. 👉 Explore more on consensus mechanisms and staking
Frequently Asked Questions
What was The Merge?
The Merge was Ethereum's transition from a Proof-of-Work consensus mechanism, which relies on miners solving complex puzzles, to a Proof-of-Stake system, where validators lock up ETH to secure the network and create new blocks. This drastically reduced the network's energy consumption.
What happened to the Ethereum miners after The Merge?
With Ethereum no longer mineable, miners had to choose between shutting down their equipment or migrating to other Proof-of-Work blockchains like Ethereum Classic (ETC), Ravencoin (RVN), or new forks like ETHW. Many miners faced lowered profitability due to increased competition on these alternative networks.
What are the main regulatory concerns with Proof-of-Stake?
Regulators, particularly the U.S. SEC, are concerned that staking—where users earn rewards for participating in network validation—closely resembles a financial security. If staking is deemed a security, the platforms offering these services would face significantly more regulatory oversight and compliance requirements.
Did the Ethereum forks succeed?
In the immediate aftermath, the forked chains (ETHPOW and others) failed to gain significant market share or developer traction. Their combined market capitalization remained a tiny fraction of Ethereum's, and their long-term viability remains uncertain compared to the established ecosystem of the main Ethereum chain.
How did The Merge affect the price of ETH?
The price of ETH experienced volatility around the event, dipping below $1,500 shortly after The Merge. This was likely due to market uncertainty, the unwinding of pre-merge trading positions, and the initial selling of free forked tokens received by ETH holders.
Is Ethereum more centralized after switching to Proof-of-Stake?
The data shows a similar level of concentration but in different entities. Where mining was dominated by a few large pools, staking is currently led by liquid staking provider Lido and major centralized exchanges. This has raised new debates about the decentralized nature of the network's validation process.