The Merge came, looked, and took control. Not that the prices for cryptocurrencies would lead you to believe otherwise.
On September 15, the massive upgrade to the Ethereum blockchain finally went live, smoothly transitioning it to a "proof of stake" (PoS) system that uses less energy.
Even though ether had risen about 85 per cent from its June lows in anticipation of the event, it has since fallen 19 per cent as a result of investor anxiety over inflation and central bank policy, along with bitcoin and other risky assets.
Despite this, a lot of industry participants are upbeat about the long-term prospects of Ethereum and its native cryptocurrency.
"Previously, we have talked to sovereign wealth funds and central banks to help build their digital asset allocations... but direct investment has been voted down due to energy concerns," said Markus Thielen, chief investment officer at asset manager IDEG Limited.
"With Ethereum moving to PoS, this clearly solves this last pillar of concern."
Some cryptocurrency investors are currently focusing on the upcoming occasion that might affect prices.
The "Shanghai" upgrade, which aims to lower Ethereum's high transaction costs, is expected by market participants to arrive in about six months.
It would enable validators to withdraw their staked coins, keep them, or sell them after they have deposited ether tokens on the blockchain in exchange for a yield.
There is a lot at stake because, according to data provider Glassnode, there are currently over $20 billion in locked-up ether deposits.
According to CoinMarketCap data, the staked ether cryptocurrency, which is seen as a bet on Ethereum's long-term success as it cannot be redeemed until Shanghai takes place, is trading at almost parity with ether at 0.989 ether, indicating confidence in future upgrades.
In June, the coin had fallen as low as $0.92.
Beyond Shanghai, Ethereum will receive a plethora of other improvements, which co-founder Vitalik Buterin has dubbed "the surge," "verge," "purge," and "splurge."
Future improvements are likely to concentrate primarily on increasing the blockchain's capacity to handle more transactions.
"Because the Merge was delayed for several years, investors, traders, and end-users have a great deal of trepidation around when Ethereum will meaningfully scale," said Alex Thorn, head of firmwide research at blockchain-focused bank Galaxy Digital.
Paul Brody, global blockchain leader at EY, said: "Ethereum's future needs to, and will, scale to hundreds of millions of transactions a day."
The main objective of The Merge was to lower Ethereum's energy consumption in light of criticism of cryptocurrencies' significant carbon footprint. According to the developers, the blockchain's energy consumption was reduced by an estimated 99.95%, which might entice powerful institutional investors who were previously restrained by environmental, social, and governance (ESG) considerations.
According to Adam Struck, CEO of venture capital firm Struck Crypto, the Merge and upcoming upgrades also lessen the investment appeal of so-called "Ethereum killer" blockchains like Solana and Polkadot.
Institutional investors aren't investing just yet, though, as a terrifying macro environment is choking off appetite for risk.
However, in the long run, switching to PoS is anticipated to reduce the rate of ether token issuance by up to 90%, which should result in higher prices.
Investors may also find the 4.1 per cent annual yields for staking ether tokens to validate transactions alluring.
Although the proof-of-stake algorithm enables these lucrative returns, many cryptocurrency purists point out that it takes Ethereum away from a completely decentralized model because the largest validators may have more control over the blockchain.
But for now, it might be best for the Ethereum community to savor the Merge moment.
"There may be volatility in the days to come," said analysts at Kaiko Research. "But for now the community can take a well-earned victory lap."
(Source:www.reuters.com)
On September 15, the massive upgrade to the Ethereum blockchain finally went live, smoothly transitioning it to a "proof of stake" (PoS) system that uses less energy.
Even though ether had risen about 85 per cent from its June lows in anticipation of the event, it has since fallen 19 per cent as a result of investor anxiety over inflation and central bank policy, along with bitcoin and other risky assets.
Despite this, a lot of industry participants are upbeat about the long-term prospects of Ethereum and its native cryptocurrency.
"Previously, we have talked to sovereign wealth funds and central banks to help build their digital asset allocations... but direct investment has been voted down due to energy concerns," said Markus Thielen, chief investment officer at asset manager IDEG Limited.
"With Ethereum moving to PoS, this clearly solves this last pillar of concern."
Some cryptocurrency investors are currently focusing on the upcoming occasion that might affect prices.
The "Shanghai" upgrade, which aims to lower Ethereum's high transaction costs, is expected by market participants to arrive in about six months.
It would enable validators to withdraw their staked coins, keep them, or sell them after they have deposited ether tokens on the blockchain in exchange for a yield.
There is a lot at stake because, according to data provider Glassnode, there are currently over $20 billion in locked-up ether deposits.
According to CoinMarketCap data, the staked ether cryptocurrency, which is seen as a bet on Ethereum's long-term success as it cannot be redeemed until Shanghai takes place, is trading at almost parity with ether at 0.989 ether, indicating confidence in future upgrades.
In June, the coin had fallen as low as $0.92.
Beyond Shanghai, Ethereum will receive a plethora of other improvements, which co-founder Vitalik Buterin has dubbed "the surge," "verge," "purge," and "splurge."
Future improvements are likely to concentrate primarily on increasing the blockchain's capacity to handle more transactions.
"Because the Merge was delayed for several years, investors, traders, and end-users have a great deal of trepidation around when Ethereum will meaningfully scale," said Alex Thorn, head of firmwide research at blockchain-focused bank Galaxy Digital.
Paul Brody, global blockchain leader at EY, said: "Ethereum's future needs to, and will, scale to hundreds of millions of transactions a day."
The main objective of The Merge was to lower Ethereum's energy consumption in light of criticism of cryptocurrencies' significant carbon footprint. According to the developers, the blockchain's energy consumption was reduced by an estimated 99.95%, which might entice powerful institutional investors who were previously restrained by environmental, social, and governance (ESG) considerations.
According to Adam Struck, CEO of venture capital firm Struck Crypto, the Merge and upcoming upgrades also lessen the investment appeal of so-called "Ethereum killer" blockchains like Solana and Polkadot.
Institutional investors aren't investing just yet, though, as a terrifying macro environment is choking off appetite for risk.
However, in the long run, switching to PoS is anticipated to reduce the rate of ether token issuance by up to 90%, which should result in higher prices.
Investors may also find the 4.1 per cent annual yields for staking ether tokens to validate transactions alluring.
Although the proof-of-stake algorithm enables these lucrative returns, many cryptocurrency purists point out that it takes Ethereum away from a completely decentralized model because the largest validators may have more control over the blockchain.
But for now, it might be best for the Ethereum community to savor the Merge moment.
"There may be volatility in the days to come," said analysts at Kaiko Research. "But for now the community can take a well-earned victory lap."
(Source:www.reuters.com)
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