By consensus, we mean that a general agreement has been reached. Consider a group of people going to the cinema. If there is no disagreement on a proposed choice of film, then a consensus is achieved. If there is disagreement, the group must have the means to decide which film to see. In extreme cases, the group will eventually split.
What is a consensus mechanism?
In regards to the Ethereum blockchain, the process is formalized, and reaching consensus means that at least 66% of the nodes on the network agree on the global state of the network.
The term consensus mechanism refers to the entire stack of protocols, incentives, and ideas that allow a network of nodes to agree on the state of a blockchain.
Some concepts are important to a consensus that is not explicitly defined in code, such as the additional security offered by potential out-of-band social coordination as a last line of defense against attacks on the network. These components together form the consensus mechanism.
Proof of Work by example
Imagine a group of treasure hunters trying to open a chest with a complicated lock attached to it. Figuring out the correct combination is tedious, but the first person to do so gets rewarded.
Simply put, Proof-of-Work is a race to figure out the right combination on a treasure chest.
Proof of Stake by example
Picture a group of treasure hunters vying for a chest. The chest is rewarded based on a lottery system. To participate, each hunter has to buy lottery tickets. The more each hunter buys, the higher the chance of winning.
The Ethereum Merge
What was The Merge?
The Merge was the joining of the original execution layer of Ethereum (the Mainnet that has existed since Genesis) with its new proof-of-stake consensus layer, the Beacon Chain. It eliminated the need for energy-intensive mining and enabled the network to be secured using staked ETH. It was a fascinating step in realizing the Ethereum vision—more scalability, security, and sustainability.
Merging with Mainnet
Proof-of-work secured Ethereum Mainnet from genesis until The Merge. This allowed the Ethereum blockchain we're all used to, to come into existence in July 2015 with all its familiar features—transactions, smart contracts, accounts, etc.
Throughout Ethereum's history, developers prepared for an eventual transition away from proof-of-work to proof-of-stake. On December 1, 2020, the Beacon Chain was created as a separate blockchain from Mainnet, running in parallel.
The Beacon Chain was not originally processing Mainnet transactions. Instead, it was reaching a consensus on its own state by agreeing on active validators and their account balances. After extensive testing, it became time for the Beacon Chain to reach a consensus on real-world data. After The Merge, the Beacon Chain became the consensus engine for all network data, including execution layer transactions and account balances.
The Merge represented the official switch to using the Beacon Chain as the engine of block production. Mining is no longer the means of producing valid blocks. Instead, the proof-of-stake validators have adopted this role and are now responsible for processing the validity of all transactions and proposing blocks.
No history was lost in The Merge. As Mainnet merged with the Beacon Chain, it also merged the entire transactional history of Ethereum.
Energy consumption and scaling
The Merge marked the end of proof-of-work for Ethereum and start the era of a more sustainable, eco-friendly Ethereum. Ethereum's energy consumption dropped by an estimated 99.95%, making Ethereum a green blockchain. Learn more about Ethereum energy consumption.
The Merge also set the stage for further scalability upgrades not possible under proof-of-work, bringing Ethereum one step closer to achieving the full scale, security, and sustainability outlined in its Ethereum vision.