What happens to $ETH after the merge on 19 September?

TL;DR Breakdown

  • The much-anticipated Ethereum merge is likely to be complete soon, as announced by the official sources.
  • The merge of Ethereum will result in the migration of it from Proof of Work to Proof of Stake.
  • As the merge takes place, it will have an impact on the market of $ETH as it has seen a rise in value.

Ethereum merge is one of the biggest events in the crypto market that is expected to have lasting impacts. It is evident from the fluctuations in the value of $ETH as it went through changes with the news of the merge. Its value saw a considerable increase as the investors remained bullish on it because of the possible benefits. The impacts of the Ethereum merge will be vast because of the large number of protocols and DApps based on Ethereum.

The integration aims to make Ethereum more efficient, scalable, and sustainable. The recent few months brought many blockchain companies into a tumbling state because of the upsetting losses. The merge will upgrade Ethereum’s system and shift to a new system that will bring ease and other benefits to the users.

Here is a brief overview of the Ethereum merge and how it will impact the market of $ETH.

What is Ethereum merge?

Ethereum merge, as said above, is the transition of the Ethereum blockchain from Proof of Work to Proof of Stake. It is a complex multi-step process that has faced impediments multiple times due to technical issues. It was scheduled to be complete in July, but the technical team has extended it to September. Once the merge is complete, it will change the consensus protocol for Ethereum. It is the first of its kind, as no blockchain of this size has gone for this tremendous overhaul.  

The upgrade was deemed necessary because it needed to change the method of processing transactions. Like Bitcoin, Ethereum currently uses Proof of Work which is a complex process for the validation of transactions and the security of the network. The mentioned process is effective but lacks efficiency. A better alternative is Proof of Stake, which requires less energy and equipment.

In contrast, Proof of Stake makes the process easier by staking Ethereum. It will require staking members to have at least 32 ETH. They will receive the reward in the form of $ETH by contributing to the system. The merge will lower the risk of Ethereum being controlled by big corporations, while users will benefit in the form of $ETH.

What will it result in for the market?

Huobi has conducted research regarding the impacts of the Ethereum merge on the market. According to the mentioned research, the impacts will be multifold for the market. These include shrinkage in the issuance of ETH, which will lower by 90%. It will also change the number of staked Ethereum, which will increase in number. The staked Ethereum will reach 13.4 million, reducing the in-circulation ones. It will lead to a considerable increase in the value of $ETH, as the price of forked tokens could exceed.

Also, as the miners shift from Ethereum to ETC, it will strengthen the ETC price. If the Ethereum transfer hashrate exceeds 10%, it will increase the ETC price by 4 times. The net new production for ETH will change, and the annual deflation rate before the merge would be 2.39%. The total staking rewards after the merge will experience a small change, but the total rewards will remain constant at 583,100 ETH.

The demand for staking will increase after the merge, and tips will be imposed on the original Beacon Chain. Forking stands the chance of becoming an independent ecosystem if the forking proposal receives support. The biggest beneficiary of this change is expected to be ETC which is expected to see a rise in the price of about 4 times.   

Conclusion

Ethereum merge is one of the most anticipated events in the market that is expected to occur on 19 September 2022. The mentioned change will have impacts on $ETH as well as others in the market. According to the study conducted by Huobi, it will reduce the danger for Ethereum while also strengthening the value of ETC. 

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