The long awaited transition from Proof of Work (PoW) to Proof of Stake (PoS) better known as "The Merge" is the largest change in Ethereum's history. This idea has been in the works since 2015 and will fundamentally change how the network is secured and lays the foundation for the next phase of improvements.
The most notable change is the addition of the Beacon chain (Consensus layer) which launched on December 1, 2020 and will be replacing Proof of Work mining. It will coordinate and pseudo randomly select block producers from the pool of stakers (also called validators) in a way that makes it extremely difficult for validators to coordinate attacks on the network. To make sure all of this happens in a secure manner each node will need an additional Consensus Client to run the consensus algorithm and choose block validators, slash malicious accounts.
The Transition from PoW to PoS also removes the need for GPU's which will reduce the energy consumption of Ethereum by 99.95%!
Sound too good to be true? See for yourself.
The addition of the beacon chain will allow developers to start working on scaling solutions like Sharding. Sharding will allow Ethereum to scale horizontally and allow validators to correctly verify data with only a small amount of the network data.