What are the implications of the Ethereum merger? By Investing.com



Investing.com – is the second largest cryptocurrency, with 18% of total market capitalization, and the first (2015) largest “software” smart contract platform. Ethereum is moving from a proof-of-work (PoW) system to a proof-of-stake (PoS) system, in an unprecedented move called Ethereum 2.0.

“A successful ‘merger’ in August would boost the platform and uses, from gaming to finance, after the price plummeted 60%,” said Ben Laidler, global market strategist at eToro.

This expert discusses the implications of the Merger for ETH: “It aims to increase scalability (more transaction capacity and less fees), reduce power consumption (estimated at 95%), provide performance (as a reward for participating in the protocol) and increase competitiveness against competing DeFi coins such as (ADA), (SOL) or (),” Laidler describes.

The three steps are:

  1. December 2020: launch of the PoS beacon chain.
  2. A “merger” of the Beacon chain with the Ethereum mainnet in August 2022.
  3. Add chains of shards to reduce congestion and increase capacity.

Effects of the Ethereum merger on the market

“The ‘merger’ will also improve the balance between ETH supply and demand. PoS ‘validators’ need a minimum of 32 ETH, and the higher ‘consumption rate’ will be more deflationary” , notes an expert from eToro.

“Furthermore, this year’s steep price decline has lowered expectations, which could lead to further delays. Co-founder Buterin said the ‘merger’ will take place in August, or possibly later, which will allow competitors to gain more share. In addition, lower tariffs and network congestion will not reach fragmented chains by 2023,” concludes Laidler.

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