The merge is a planned network upgrade that will combine the Ethereum mainnet and the Beacon Chain to transition from the proof-of-work consensus mechanism to the proof-of-stake system.
Ethereum 2.0 is far too big and complex to be introduced in a single release. Instead, it will be implemented over several stages, the first of which is called the Beacon Chain.
The merge will replace the proof-of-work consensus mechanism with a proof-of-stake system while benefiting from the full history and the current state of Ethereum to enable a smooth transition.
The Beacon Chain is a new blockchain that is running alongside Ethereum to help with the transition from a Proof of Work (PoW) to a Proof of Stake (PoS) consensus mechanism. The Beacon Chain, which is considered phase 0 of a major upgrade to the Ethereum blockchain, went live on December 1, 2020.
After the merge, the next stage will be the deployment of 64 shard chains to boost the network’s capacity and transaction speeds. Sharding is becoming an increasingly common way of splitting up the massive volumes of data handled on a blockchain into smaller pieces to decrease network congestion and boost processing speeds.