Why the Merge Should Be Prioritized Over Data Sharding

Some Background

The roadmap for Ethereum has evolved over the years, in good ways. Not too long ago, ETH 2 was divided into phases, roughly as follows:

Phase 0: Staking on the Beacon chain (completed / happens today).
Phase 1: Data Sharding.
Phase 1.5: the Merge.
Phase 2: TBD (this phase is/was the most nebulous; basically, there could be further improvements made to Ethereum).

These Phases Need Not Happen Chronologically

In recent months, Vitalik, Danny R., and others, have clarified that Phases 1 and 1.5 need not occur in that order. In other words, the Merge could be prioritized and implemented before Data Sharding. I urge the community to prioritize the Merge over Data Sharding for at least the following reasons:

• Rollup tech buys us time. Both optimistic rollups and ZK rollups are now coming online. These have the ability to scale Ethereum from less than 10 TPS to over 1000 TPS. We gain at least two orders of magnitude of scaling with rollups. Once major DAPPs such as Uniswap migrate to L2 (it is happening!), then fee pressure on L1 will be greatly alleviated. And it is all happening in the short term, over the course of the next few months. I estimate that this will provide at least 1 to 2 years before Data Sharding is needed to further scale Ethereum to 100,000+ TPS.
• Having the Merge at the ready provides a fallback for the community should a cartel of miners collude to neutralize the positive effects of EIP 1559. There are some within the mining community who have threatened to form a group of miners to essentially prevent some aspects of EIP 1559 from having their intended effect. While I believe it would be difficult or impossible for this group of miners to pull this off, there is a small chance that they might be successful. The community would rightly interpret such an action to be an attack on the network. The mere fact that the Merge is prioritized before Data Sharding might be enough to ward off such an attack like a Sword of Damocles, given that the Merge is the final separation of POW miners from the network. This would further incentivize the mining community not to attempt to subvert the network.
• The Merge brings immediate liquidity to POS stakers who have tied up their ETH.
• The Merge is technically less complex than Data Sharding, albeit still with significant implications to the network. It shouldn't be rushed, but it also should not be delayed. Careful development with multiple testnets are obviously called for. Overall, it is better to implement the technically-less-complex option having more immediate benefits to the community, and then shift community attention to the technically-more-challenging Data Sharding effort.