EthereumShort
What's the big deal with the ETH merge?
Updated
The Ethereum merge is only days away, around 15 September 2022, meaning ETH will transition from Proof-of-Work to Proof-of-Stake.
The good:
- should increase security through decentralizing, provided a broader pool of validators
- energy consumption will be reduced by over 99%
- such a big and important transition will strengthen the confidence in crypto as a whole
The bad:
- could actually reduce security and cause further centralization because there are a few large players involved in staking
- could be easier for governments around the world to control Ethereum at the protocol level because they can impose rules and regulations on these big entities staking ETH (possibly censoring transactions as a result)
What not to expect yet:
- is not going to reduce gas fees
- transaction speed will remain relatively the same
- won't do a lot to reduce network congestion
- staked eth2 will still not be able to unlock
The ETH merge could provide an immediate relief rally. And after that we probably will see the result of "Buy the rumor and sell the news".
The good:
- should increase security through decentralizing, provided a broader pool of validators
- energy consumption will be reduced by over 99%
- such a big and important transition will strengthen the confidence in crypto as a whole
The bad:
- could actually reduce security and cause further centralization because there are a few large players involved in staking
- could be easier for governments around the world to control Ethereum at the protocol level because they can impose rules and regulations on these big entities staking ETH (possibly censoring transactions as a result)
What not to expect yet:
- is not going to reduce gas fees
- transaction speed will remain relatively the same
- won't do a lot to reduce network congestion
- staked eth2 will still not be able to unlock
The ETH merge could provide an immediate relief rally. And after that we probably will see the result of "Buy the rumor and sell the news".
Note
The good:- reduction in inflation rate, from 4.13% to 0.49%
Source: ethereum.org/en/upgrades/merge/issuance/
Note
If we assume that the bottom is in by end of 2023. What will the price outlook be for 2023?
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