Question:

How will the "Merge" affect ERC20 Tokens?

Honestly, the answer to this question was not as simple as I thought it would be. 

In order to answer this question,  we need to understand  a few things.

#1 Key Terminology- EIP's

EIP- Etherum Improvement proposals-

EIPs provide info, describe standards and introduce new features of Ethereum. EIPs are reviewed and agreed upon before being implemented on Ethereums blockchain.

Different Types of EIPs:

• Standards Track EIP; any major Ethereum change, including:
  – Core; Improvements that require a fork or changes related to core dev.
  – Networking; Improvements around devp2p and Ethereum networking protocols.
  – Interface; Improvements in client API/RPC standards and also language level specifications like naming and ABIs.

• ERC; Application-level standards and conventions like contract standards.

• Meta EIP; Processes around Ethereum or a change in a process. Users can’t ignore these EIPs. They include procedures, guidelines, changes, etc.

• Informational EIP; Describes design issues and information about the Ethereum but doesn’t introduce a new feature.

#2 What is an ERC20 Token?

WHY ERC20 Tokens were Created?

ERC = Etherum Improvement Proposal for Application level Standard and convenctions like contract standards.

EIP 20 – Token standard.

EIP 20 -Etherum Improvement proposal – (approved and implemented in 2015) was the blueprint for creating and issuing Smart Contracts on Ethereum Blockchain.

Note: Smart contracts are self-executing lines of code with the terms of an agreement between buyer and seller automatically verified and executed via a computer network

EIP 20 provided the basic functionality needed to “transfer tokens, as well as allow tokens to be approved so they can be spent by another on-chain third party.”

The EIP 20 provides a list of functions as an interface that allows other applications to use it.

• Functions
  – name
  – symbol
  – decimals
  – totalSupply
  – balanceOf
  – transfer
  – transferFrom
  – approve
  – allowance

• Events
  – Transfer
  – Approval

In other words The EIP-20 standard introduced and implemented the ERC-20 Token Standard, which is the technical standard used to create all ERC20 Tokens . These tokens are Smart Contracts that represent as asset or utility, such as coins or voting, and run on the Ethereum Blockchain. Important to point out, ERC20 tokens are not a Cryptocurrency (digitized currency), they are a Utility Token.

#3 - What is The Merge? -

The Ethereum Proof of Stake Merge

“Ethereum’s history on the PoW network will be preserved as the PoS consensus layer is merged in as a replacement for PoW. This will be done through what is known as “The Merge”. Once completed, the PoW consensus layer in Ethereum will be removed and consensus on all future blocks on the Ethereum blockchain will be achieved by the new PoS consensus layer. None of the transactions done on the Ethereum network will be lost in this transition - "The Merge" will have no effect on the data layer of the Ethereum network. "The Merge" is not the launch of a new Ethereum version, but rather an exciting upgrade to the consensus layer - bringing Ethereum in line with the original vision laid out at its genesis.”

Now, back to the original question:

How will the ETHERUM Merge affect ERC20 Tokens?         

      Answer: The Merge will Verify and Validate all ERC20 token transactions thru Proof of Stake, instead Proof of Work, on the Ethereum            Blockchain.

     Remember ERC20 tokens, are Smart Contracts created using the EIP20 token standard- 
      these “Utility Tokens” run on, the data layer, of the Ethereum Blockchain.

Conclusion:

Your ERC20 tokens will not be affected after the “Merge”. You will be able to deposit, withdraw, send, trade, use ERC20 tokens in the same way, pre “Merge”

Technically, speaking, this upgrade is happening “under the hood”, behind the scenes, not affecting the Users Interface.

I tried to simplify this answer as best as possible.

With all that being said...There is so much more to the “Merge” than Just a change in the Consensus Layer..

This is something that has never been done before, so yes, there can be bugs and other issues that arise. I feel we are still in Crypto’s Infancy, actually, more like Crypto’s Toddler stage, due to Crypto temper tantrums :) Crypto is still evolving, growing and developing, anything that is possible to happen, might actually happen.

Advice for Pre/Post Merge:

MOVE YOUR COINS OFF EXCHANGES!!! KEEP THEM IN YOUR OWN WALLET, in case there are any Surprises.

Plan a day or two Pre Merge, to move your Coins/Tokens to your own personal wallet. The day of and day after the Merge, Do NOT move them. Let the dust settle.

If an Ethereum Fork should happen, as a result of the Merge, and you held your ETH, or ERC20 tokens on the exchange during the snapshot, you might not receive the Coins from that fork. Exchanges do not always release these airdrops/ forked coins to its account holders. That decision, is decided by the Exchange.

Be Safely Ready for this highly anticipated Upgrade Event.. Aside from Crypto Market price action, what do you think will happen as a result of the "Merge”?

If you have any questions relating to this or other crypto related issues, I am a Crypto Coach, and can help.

Set up a Free 15 min Crypto discovery session appointment, to see if my services are beneficial to your needs.

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Hope this article was insightful helpful to you. Leave a comment below.

Namaste

iCryptobeing