The news of the merger of Ethereum aroused optimism on the Internet. In the past 7 days, the price of ETH has recovered, and it once rose by more than 19%, and the price broke through 1.6k US dollars. Ethereum prices held above $1,500 as the merger frenzy eased over the weekend.
Ethereum co-founder Vitalik Buterin recently stated that the team is working on five long-term phases to enhance the overall functionality of the network, with the long-awaited merger being the first thing on the schedule. Buterin said the merger is 90 percent complete and just needs to be tested on Ropsten, and it's "soon to happen". The 9th shadow fork went live recently, marking the start of the final testing phase of the merge. After the merge happens, validators are free to start withdrawing their ETH locked in the deposit contract.
Ethereum researcher Vivek Raman also said in an interview that from an economic point of view only, due to the impact of supply factors, Ethereum does have a chance to surpass Bitcoin. After the merger, Ethereum will have a lower inflation rate than Bitcoin. Especially with fee burning, Ethereum will be deflationary.
However, encryption researcher Mando tweeted that he is very bullish on ETH, but there is also a lot of misinformation about the merger of Ethereum. First of all, Gas fees may not drop significantly (at least in the medium term), and secondly, ETH will not experience deflation, and its supply should increase by about 0.2% per year. Despite the opposition, many analysts still believe that the merger will increase the profitability of the entire Ethereum network in the coming months. While inflation continues to plague the global economy, Ethereum will be the biggest deflationary currency.
Now, if macro conditions continue to deteriorate, the situation for investors could change entirely. Nonetheless, traders’ optimism for Ethereum remains high as they have a lot to expect ahead of ETH’s Merge launch. According to the data, the issuance of ETH after the merger is expected to drop by 90%. After the release of EIP-1559 last year, 80% to 85% of transaction fees were burned. This could result in more ETH being burned than issued. Currently, the yield on staking ETH is 3.9%, which is expected to soar to 6% to 7%. In turn, a higher staking yield will result in more ETH being staked. This will lead to higher security, because it will become more expensive to obtain 51% ETH collateral. Increasing yield will mean higher profitability for staking providers.
DeFi researcher Vivek Raman emphasized on Twitter that the upcoming merger of Ethereum will create a better economic structure for the smart contract platform. According to Raman, the shift to PoS reduces ETH’s inflation, provides better security, and positions ETH as a digital bond. After the merger, the ETH inflation rate will drop from 4.3% to 0.22%. He further explained that this reduces the issuance of its ecosystem by 95%, limiting the amount of ETH that can be sold in a day. Raman also said that after the merger, the platform will have better security. He cited an article by Vitalik Buterin, the co-founder of Ethereum, and emphasized that once the network runs on PoS, the cost of attack will be higher. Beyond that, Raman also believes that the Ethereum merger will allow ETH to complement Bitcoin’s use cases as a store of value and collateral asset. He noted that while BTC will function as digital gold, ETH will position itself as a digital bond and as collateral in DeFi.
Vivek Raman, head of Proof of Stake (PoS) at BitOoda, a digital asset fintech company, also pointed out on Twitter that the merger of Ethereum is one of the most powerful catalysts in the history of encryption, and it is rapidly approaching. ETH will transform into an economic An asset that is physically (and environmentally and game theoretically) sustainable, arguably more so than BTC. The next key date for Merge Watchers — the final testnet Goerli merge is August 8-10. If it goes well, we could be targeting a mainnet merger in late September, and then the crypto industry could be led by a new champion.
As the ETH merger approached, whales began to enter accumulation mode. Laurent Kssis, head of Hashdex Europe, said that ETH's recent rise is related to the optimism surrounding the upcoming merger of Ethereum, which has encouraged many retail investors to seize ETH's investment strategy. However, Laurent Kssis also admitted that this rise may be short-lived, because there are still strong sell orders in the market, supported by ETH liquidation.
Hedge fund LedgerPrime also pointed out in a market commentary report sent to counterparties that ETH appeared to form a base above $1.5K, where it started a new rise and climbed to $1.65K throughout the week, but there Significant resistance was found.
