Why didn’t gas prices go down after Ethereum’s Merge?

The Ethereum Merge, which took place on September 15, 2022, marked a significant transition for the Ethereum network from a Proof of Work (PoW) consensus mechanism to a Proof of Stake (PoS) system. This change was primarily aimed at reducing Ethereum’s energy consumption and setting the stage for future scalability improvements. However, it did not directly address the issue of gas fees, which are the transaction costs on the Ethereum network.Here are some reasons why gas prices did not decrease after the Merge:

1. Nature of the Merge

The primary focus of the Merge was to change the consensus mechanism to PoS, which significantly reduced Ethereum’s energy consumption. It did not include any direct changes to increase transaction throughput or reduce gas fees.

2. Network Demand and Supply

Gas prices on Ethereum are largely determined by network demand and supply dynamics. If there is high demand for transactions and limited block space, gas prices will remain high. The Merge did not alter these fundamental dynamics.

3. Scalability Solutions Were Not Implemented

The Merge itself did not implement scalability solutions like sharding, which are expected to increase transaction throughput and potentially reduce gas fees in the future. These solutions are part of Ethereum’s longer-term roadmap and are expected to be implemented in subsequent upgrades.

4. Layer 2 Solutions

While the Merge did not decrease gas fees directly, Layer 2 solutions such as Optimistic Rollups and zk-Rollups continue to be developed and deployed to help alleviate high gas costs by processing transactions off-chain and settling them on-chain.

5. Market Speculation and Expectations

There may have been some misunderstanding or speculation in the market about what the Merge would achieve in terms of transaction costs. While it was a crucial step for Ethereum’s evolution, it was not intended as a solution for high gas fees.In summary, while the Merge was a critical upgrade for Ethereum’s sustainability and future scalability, it did not directly address gas fees. Future updates and Layer 2 solutions are expected to tackle these issues more effectively.