Let’s look at the the winners and losers of the Ethereum Merge upgrade
- Ethereum‘s (ETH-USD) Merge upgrade has finally been implemented.
- Investors are curious to know what has changed and how the upgrade effects price prospects.
- While Ethereum is set to benefit greatly, crypto miners and rival networks could lose out.
It’s finally here. Ethereum’s (ETH-USD) Merge upgrade is reaching the masses this week, marking the end to a seven-year development strategy and a two-year period of public build-up. But what does the Ethereum Merge mean? Who will benefit, and who will suffer? What’s left to do for the development team? There are plenty of questions being asked around the market. Luckily, we already have many answers.
The Merge plan was first unveiled by Ethereum in 2020, though it had been an inevitability since the project’s launch in 2015. When releasing Ethereum, co-founder Vitalik Buterin had big plans to shift the network to a proof-of-stake model in the future. So, tucked into the code was a “difficulty bomb” and a timer, after which ETH mining would become essentially impossible.
For the last two years, investors have been hyping up the Merge as developers began taking baby steps toward its final rollout. The upgrade itself sees the Ethereum chain merging with a “Beacon” chain — hence the name. This Beacon chain contains all of the big upgrades investors are pining for, including the switch from proof-of-work to proof-of-stake.
The upgrade did not come without its roadblocks, as any crypto fanatic following the event could tell you. After all, the Merge was delayed an eye-popping six times, including a final delay in July that brought the final September release date. Alas, it’s finally here, but what does it mean for the investors who use Ethereum, as well as those who don’t? Simply put, the news has big implications for the entire industry. And while ETH isn’t seeing the big price boom some might have expected, the coin’s fundamental value is on an upward trajectory.
Ethereum Merge: What to Know
The Ethereum Merge is a huge event for crypto fanatics, but a lot is lost on investors. Much of the talk is fairly technical. There are plenty of crypto investors who simply want to know how the Merge will improve their trading and staking experiences, as well as how the Merge affects ETH and other cryptos’ prospects.
Well, one of the most obvious changes is the improvement in performance Ethereum users will get. Trading on the Ethereum chain is now much faster and more efficient than ever before. By transitioning away from proof-of-work, the high energy use and slow transaction settlement times of Ethereum are a thing of the past. This is also going to bring down the cost of transactions on the network significantly. And with further plans to up scalability through sharding, this experience will only improve.
Crypto miners will certainly suffer at the expense of these performance upgrades. Without proof-of-work on the network, all those ETH mining machines miners have accumulated are essentially worthless. Seeing as ETH is the second-largest proof-of-work currency, this change does a blow to the global revenue of the space. These miners will likely focus their efforts on Bitcoin (BTC-USD) now. Though, with less than 10% of BTC left to mine, the industry will have another problem on its hands soon enough.
As for ETH prices, investors may notice that the coin is trending down today by more than 5%. As analysts point out, the unlocking of millions of staked ETH tokens is creating selling pressure post-Merge. But fear not. The fundamental value of ETH is skyrocketing. This is sure to reflect itself in steady gains down the line. Other layer-1s, like Solana (SOL-USD), Avalanche (AVAX-USD), Tron (TRX-USD), might be running into trouble, though. For years, these networks have used their faster transaction times and lower fees as selling points against ETH. Now, that selling point is out the window, meaning these networks will have to rethink their pitches.
This post originally appeared at InvestorPlace.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.