ETH: Ethereum (ETH) is the 2nd largest crypto asset, at 18% of total market cap, and first (2015) and largest smart contract ‘software’ platform. It’s the native token of this blockchain, taking its value from its success. Ethereum is transitioning from energy-intensive Proof-of-Work (PoW) to Proof-of-Stake (PoS), in an unprecedented initiative called Ethereum 2.0. A successful August ‘merge’ would boost the platform, and uses from gaming to finance, after its 60% price plunge.
MERGE: This aims to boost scalability (more transaction capacity and less gas fees), cut energy usage (by estimated 95%), provide yield (as reward for participating in protocol), and boost competitiveness vs competing DeFi coins like Cardano (ADA), Solana (SOL), Polkadot (DOT). The 3 steps are 1) Dec. 2020 launch of parallel PoS Beacon Chain. 2) An Aug. 2022 ‘Merge’ of Beacon chain with Ethereum Mainnet. 3) Add Shard Chains to cut congestion and add capacity.
MARKET: The ‘merge’ will also improve the supply/demand balance for ETH. PoS ‘validators’ need a minimum 32 ETH, and the increased ‘burn rate’ will be more deflationary. Additionally, this year’s sharp sell-off healthily lowered expectations, with 1) more delays possible. Cofounder Buterin said ‘merge’ to happen in August, or maybe later, allowing competitors to gain further share. Plus, the lower gas fees and network congestion is not to come until shard chains in 2023.
All data, figures & charts are valid as of 01/06/2022
