Tag: Merge

Ethereum Supply Slowed after ‘the Merge,’ Will It Drive Investment Narrative?

by Blockchain News

According to data from Ethereum tracker Ultrasound Money, the latest upgrade on Ethereum (the Merge) is lowering the supply of Ether (ETH) in the proof-of-stake consensus.

The second larger cryptocurrency, however, may still have a long way to go before becoming deflationary.

Some of the key promises that the upgrade pledged to do for the Ethereum blockchain were to improve efficiency and make the network more scalable, lower the supply of Ether, thus making it a deflationary asset, and others.

Metrics from the web portal Ultrasound Money show that the supply of Ether under the proof-of-stake network has increased by more than 5,990 from the Merge event till now. But this number is lower than it could have been under the proof-of-work consensus mechanism, the data shows.

Besides that, the number is much lower than the supply of Bitcoin whose network produces 6.25 BTC coins every ten minutes running on the proof-of-work mechanism.

According to the Ultrasound Money platform, Ether can become deflationary when the coins from block subsidy are lower than the ones being burned. Furthermore, ETH will become a deflationary asset when the number of people who transact with the coin grows higher than those who stake it.

Apart from that, the cryptocurrency will be deflationary when the transaction fee reaches 15 Gwei or 0.000000015ETH.

But for now, these conditions do not exist yet. As per Ultrasound Money, Ethereum transaction fees stand at 11 Gwei, and staking generates more tokens than burned ones.

What Is Being Seen on The Ground So Far?

On September 15, Ethereum switched from using energy-intensive technology (the proof-of-work network) to a more sustainable system (the proof-of-stake consensus) in a major update called “the merge.” The upgrade is reported to have reduced the network’s power consumption by more than 99.95%.

PoS is an alternative that consumes less energy. Instead of consuming electricity, which fuels computing power, users who want to be part of the verification process put their personal cryptocurrency on the line in a process popularly known as staking.

These users, called validators, are randomly selected to verify new information to be added to a block. They receive cryptocurrency if they confirm accurate information. If they act dishonestly, they stand to lose their stake.

While it is impossible to know exactly how the merge will play out in the long term, for now, investors are rushing to pour their funds into staking. This confirms the above narrative that Ether still has a long way to become deflationary.

Over the past week, Ether staked in the Ethereum blockchain reached almost $195 million. Under the new system, stakers contribute to the security of Ethereum by locking their ETH in exchange for a modest annual return (APR).

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Ethereum Worth Nearly $195M Staked in ETH 2.0 Deposit Contract Over the Past Week

by Blockchain News

More investments continue trickling into Ethereum 2.0 deposit contract based on the historic highs noted.

Market analyst Ali Martinex pointed out:

“Roughly 150,000 ETH, worth around $195 million, have been transferred to the ETH2 deposit contract over the past week, hitting a new all-time high of 13.9 million ETH staked.”

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Source: Glassnode

 

The ETH 2.0 deposit contract was launched in December 2020 to aid the change of the proof-of-work consensus mechanism to a proof-of-stake (PoS) framework called the merge.

 

The much-anticipated merge went live on September 15 setting the ball rolling for a PoS structure on the Ethereum network. Therefore, it is expected to propel Ethereum’s quest of becoming a deflationary asset.

 

Nevertheless, a recent analysis highlighted that Ethereum had to undergo four more steps to solve the scalability problem even after the materialization of the merge. 

 

The four phases include the surge, the verge, the purge, and the splurge. Their time frame is not well defined. Sameep Singhania, the co-founder of QuickSwap, stated:

“It’s hard to talk about the timelines of the following four stages because all of them are still under active research and development. But, in my opinion, it will easily take 2-3 years before all phases are complete.” 

Meanwhile, the median transaction volume on the ETH network has nosedived. Crypto insight provider Glassnode explained:

“ETH median transaction volume (7d MA) just reached a 23-month low of $32.38.”

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Source:Glassnode

 

On the other hand, gas usage has been increasing, suggesting that the gas fees paid in transactions have remained high. Glassnode added:

“ETH median gas usage (7d MA) just reached a 3-month high of 47,461.113 Previous 3-month high of 47,349.137 was observed on 23 September 2022.”

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Source: Glassnode

 

Ethereum was hovering around the $1,330 area during intraday trading, according to CoinMarketCap. 

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Ethereum Slips Below $1,350 as Total Liquidation Hit $300 Million in 12 Hours

by Blockchain News

Ethereum (ETH) has not been able to get the right footing since the much-anticipated Merge went live on September 15.

The second-largest cryptocurrency was down by 10.40% in the last 24 hours to hit $1,305 during intraday trading, according to CoinMarketCap. 

This price action is being experienced amid high liquidation in the cryptocurrency market. Crypto Reporter Colin Wu or Wu Blockchain pointed out:

“Ethereum fell below $1,300, a 24-hour drop of 10%, and the total liquidation amount in 12 hours reached $300 million. On September 21, the Fed will announce its decision to raise interest rates, and the market is expected to raise interest rates by 75bps.”

Given that interest rate hikes usually have a bearish impact on cryptocurrencies, it remains to be seen how this month’s review by the Federal Reserve (Fed) transpires. 

A downward trend is already being experienced in the Ethereum network. Wu added:

“ETC hashrate is 211.11T, down 32.14% from its peak; price is $29.82, down 13% in 24h; ETHW hashrate is 35.48T, down 56.23%, price is $4.66, down 46% in 24h; ETF hashrate is 6.3 TH/s, down 82%, price is $1.22, down 19.8% in 24h.”

The merge changed the consensus mechanism on the ETH network from proof-of-work (PoW) to proof-of-stake (PoS), which is deemed more environmentally friendly and cost effective.

Despite the bearish momentum being experienced, more Ether continues to be staked in the ETH 2.0 deposit contract. Market insight provider Glassnode stated:

“Total Value in the ETH 2.0 Deposit Contract just reached an ATH of 13,801,319 ETH. Previous ATH of 13,799,319 ETH was observed on 18 September 2022.”

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Source:Glassnode

Furthermore, transaction volume has been going through the roof after hitting a 4-month high of $264 million. 

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Source:Glassnode

Crypto analyst Rekt Capital believes that the bullish effects of the Merge will emerge in the long run. 

American multinational investment bank Citigroup or Citi had also stipulated that the Merge would slash the overall Ether issuance by 4.2% annually, making it deflationary,

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Active Addresses of Ethereum Hit Monthly High with $22B Being Staked before the Merge

by Blockchain News

Ethereum (ETH) continues to be at the centre stage after undergoing its biggest software upgrade called the Merge, which saw a transition from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. 

Active ETH addresses have skyrocketed after hitting a monthly high. Market insight provider Glassnode explained:

“The number of active ETH addresses (7d MA) just reached a 1-month high of 31,498.220. Previous 1-month high of 31,459.899 was observed on 17 August 2022.”

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Source: Glassnode

With weekly social engagement levels surging by 53%, active addresses were deemed to increase based on the speculation triggered by the much-anticipated Merge.

Nevertheless, Santinent acknowledged that there was heavy dominance of two addresses. The crypto analytic firm stated:

“According to our Ethereum Post Merge Inflation dashboard, 46.15% of the proof-of-stake nodes for storing data, processing transactions, and adding new #blockchain blocks can be attributed to just two addresses. This heavy dominance by these addresses is something to watch.”

On the other hand, hodlers had heavily staked in the Ethereum 2.0 deposit contract prior to this event. Crypto analyst Ali Martinez pointed out:

“ETH hodlers have staked more than 13.7 million ETH in the Eth2 Contract ahead of the Ethereum Merge, that’s more than $22 billion.”

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Source: Glassnode

After the Merge went live, it did not trigger a bullish momentum in the Ethereum network as anticipated. The second-largest cryptocurrency was down by 9.69% in the last 24 hours to hit $1,458 during intraday trading, according to CoinMarketCap.

Therefore, Ethereum needs to hold the current level to avoid a slip to $1,000. Market analyst Matthew Hyland stated:

“Ethereum is currently sitting on the neckline of the Head and Shoulders pattern Breakdown Target: $1000.”

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Source: TradingView/MatthewHyland

Therefore, time will tell how Ethereum plays out in the post-Merge era.

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Ethereum to Undergo 4 Phases to Tackle the Scalability Issue after Merge

by Blockchain News

The much-anticipated Merge saw the light of day yesterday, September 15, setting the ball rolling for a proof-of-stake (PoS) consensus mechanism in the Ethereum (ETH) network.

Since the Merge is the first step towards solving the scalability trilemma, the second-largest cryptocurrency will have to undergo four more steps to solve this issue, as reported by Bloomberg. 

The four phases include the surge, the verge, the purge, and the splurge. Per the announcement:

“The Surge: Implementation of sharding, a scaling solution which will lower the cost of bundled transactions on Ethereum.”

The report added:

“The Purge: Elimination of historical data and technical debt. The Splurge: Miscellaneous updates after the first four stages to ensure smooth functioning of the network.”

The time frame for these stages is not well defined, but Sameep Singhania believes it might take two to three years. The co-founder of QuickSwap pointed out:

“It’s hard to talk about the timelines of the following four stages because all of them are still under active research and development. But, in my opinion, it will easily take 2-3 years before all phases are complete.” 

Aditya Khanduri, the head of marketing at Biconomy, also opined that the purpose of the four upgrades was to make Ethereum cheaper, faster, and more scalable.

Upon the completion of the remaining four phases, Ethereum co-founder Vitalik Buterin pointed out that the network would be in a position to process 100,000 transactions per second.

Therefore, the merge is seen as a stepping stone toward future improvements. Developers involved in the Merge noted that switching from a proof-of-work (PoW) to PoS would make ETH easier and friendlier to design future updates that lower gas fees.

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Ethereum Energy consumption, Carbon Footprint Reduce 99.99% after Merge

by Blockchain News

The Crypto Carbon Ratings Institute (CCRI), a research-driven institution providing carbon estimates for investments in cryptocurrencies and technologies, has issued a report showing that Ethereum Merge, which was successfully completed last night, has drastically reduced the blockchain network’s overall energy consumption.

According to the report issued on Thursday September 15, Ethereum’s energy usage and carbon footprint have both dropped even more than anticipated after the Merger upgrade.

The report said Ethereum now uses approximately 99.99% less energy after the merge was completed. It further mentioned that the blockchain’s carbon footprint has also fallen by over 99.99%.

In the past, the Ethereum Foundation estimated that the merge would cut the network’s energy consumption by approximately 99.95%.

The CCRI report disclosed that Ethereum’s overall electricity consumes just 2,600-megawatt hours per year, compared to 23 million megawatt hours before the merge. As a result, Ethereum’s estimated annual CO2 emissions have fallen from over 11 million tons to just under 870 —less than the combined total of 100 average American homes, per the U.S. Environmental Protection Agency (EPA).

In a statement yesterday, Uli Gallersdörfer, CCRI co-founder and CEO, said that Ethereum’s “green credentials” are now at par with other energy-efficient blockchain networks that started with a proof-of-stake consensus model, rather than transitioning to it as Ethereum just did.

However, Ethereum’s move to proof of stake (PoS) consensus model has not gone well with some industry stakeholders. Ethereum miners, who used to run powerful computers to secure the network and earn ETH rewards through mining, have moved on to mine cryptocurrency on other networks.

Miners have moved their powerful rigs to other blockchain networks like Ethereum Classic (ETC), Ravencoin (RVN), and Ergo (ERG) to do mining.

Why the Merge Is Important

Ethereum’s switch to proof of stake has been planned since 2014, before the official deployment of the blockchain. Due to its technical complexity and the increasingly large amount of money at risk, the upgrade has been delayed several times.

The Merge is part of what in the past was called “Ether 2.0,” a series of upgrades that reshape the blockchain’s foundations.

The move, known as “the Merge,” is of huge consequence. The major network upgrade, which saw Ethereum transition from PoW to PoS, was designed to address concerns about its environmental impact, dramatically improve its transaction speed, and boost the value of Ethereum, among other improvements.

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Ethereum PoS Might Be Still Heavily Centralized: Santiment Data

by Blockchain News

Ethereum as a Proof-of-Stake (PoS) consensus model is still in its infancy, and on-chain data has started picking up some minor flaws in its organization.

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According to data from blockchain analytics provider, Santiment, there seems to be a heavy centralization in the new protocol per validator’s count.

According to the tweet from Santiment;

“According to our #Ethereum Post Merge Inflation dashboard, 46.15% of the #proofofstake nodes for storing data, processing transactions, and adding new #blockchain blocks can be attributed to just two addresses. This heavy dominance by these addresses is something to watch.”

One of the major selling points of the transition to Proof-of-Stake is that it is bound to be more decentralized as the costs of setting up a mining rig, as in the Proof-of-Work era, can be eliminated entirely.

While it is safe to assume that Ethereum 2.0 is still new and more validators are waiting for stability before being onboarded, the current outlook is an argument for any potential token that may be created as a result of the protocol’s hard fork.

Centralization May Usher in ‘Security’ Argument

While Ethereum prides itself as a community-owned token, the US regulators, including the Securities and Exchange Commission (SEC), still find it challenging to liken the coin to a non-security as it did Bitcoin.

This puts the cryptocurrency in a tight spot, and the transition to Proof-of-Stake may not have made any significant difference in changing the coin’s outlook. Should the update from Santiment be anything to go by, centralization will further help the regulator’s argument that only a few individuals are controlling the creation of the token for others to trade and invest in.

Ethereum 2.0 has been in the works for quite some time now, and some of these intricacies must have been reasoned out. Before long, the expectation is that things will normalize, and Ethereum may finally walk its way up amongst the most functional PoS protocols out there.

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The Merge is Complete: Ethereum

by Blockchain News

Cryptocurrency platform Ethereum has completed a long-awaited software upgrade.

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The upgrade – known as the Merge – has shifted the crypto platform into a more environmentally sustainable framework by reducing Ethereum’s energy consumption. It will also set the stage for future improvements that will make the platform easier and cheaper to use.

The technical details of the Merge are extremely complex, but, basically, the process boils down to a shift in how cryptocurrency transactions are verified.

After completing the Merge, Ethereum has now shifted from a verification system called proof of work (PoW) to “proof-of-stake” (PoS) – which consumes less energy and does not involve an energy-guzzling computational race, unlike its previous system. PoS also deposits or “stakes” a certain amount of participants’ crypto savings in a pool, which additionally enters them into a lottery. The new system also has a reward system; every time a crypto transaction requires approval, a winner is selected to verify the exchange and receive a reward.

Popular estimates show that Ethereum’s shift to proof of stake will reduce its energy consumption by more than 99%.

The developers involved in the Merge have said that the switch from PoW to PoS will make it easier and friendlier to design future updates that lower gas fees – the costs of executing a transaction in cryptocurrency associated with the Ethereum platform, Ether.

Ethereum is potentially the most important platform in the crypto industry. The platform’s layer of software infrastructure forms the basis of thousands of applications handling more than $50 billion in customer funds.

So far, the successful upgrade of Ethereum has become the major positive highlight of the crypto industry this year after witnessing a devastating market crash that drained nearly $1 trillion from the industry. Many prominent crypto companies were forced into bankruptcy due to the crash.

The upgrade was being looked at with a close eye as any glitches could complicate the transition. A single flaw in the Merge could have potentially disrupted the broader crypto industry, especially companies using the crypto platform’s software infrastructure. the worst-case scenario could have upended start-ups and sent the market into another major tailspin.

For precautionary measure, cryptocurrency exchange Coinbase paused certain Ethereum deposits and withdrawals during the Merge.

“And we finalized! Happy merge all. This is a big moment for the Ethereum ecosystem. Everyone who helped make the merge happen should feel very proud today,” Ethereum founder Vitalik Buterin tweeted.

The completion of the Merge has come after years of intense study and debate. Founded in 2013 by Vitalik Buterin, Ethereum is now run by a loose network of coders from around the world who spent months gathering on video calls streamed on YouTube to discuss the intricacies of the Merge.

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The Merge Begins, ETH’s Weekly Social Engagements Increase by 53%

by Blockchain News

The much-anticipated Ethereum merge is set to see the light of day is about to begin, according to a Google countdown. 

With the crypto community waiting with bated breath to see how this event transpires, given that it’s the biggest software upgrade on the Ethereum network, the second-largest crypto was hovering around $1,603 during intraday trading. 

The merge is significant because it will transition the current proof-of-work (PoW) infrastructure to a proof-of-stake (PoS) consensus mechanism, deemed more environmentally friendly and cost-effective. 

Social engagements on the Ethereum network have also been going through the roof, with the weekly surge being 53.3%, according to market insight provider LunarCrush. 

Furthermore, ETH’s speculative activity has increased. Crypto insight provider Glassnode pointed out:

“Ethereum speculative action continues, with over $6.12B in outstanding Open Interest for Call Options. Put options account for a much smaller $1.5B, making for a Put/Call Ratio of 0.25.”

American multinational investment bank Citigroup or Citi recently pointed out that the Merge would slash the overall Ether issuance by 4.2% annually, making it deflationary, Blockchain.News reported. 

Meanwhile, crypto traders have been significantly shorting Ethereum relative to Bitcoin (BTC) in anticipation of the Merge. Glassnode explained:

“The spread between BTC and ETH perpetual futures funding rates is pushing to a new ATH of 77% annualized. This indicates traders are heavily short ETH relative to BTC, likely speculating/hedging for the upcoming Merge.”

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Source: Glassnode

Therefore, time will tell how Ethereum plays out in the post-merge era, with stakes high that it will become a deflationary asset.

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The Merge Begins as ETH’s Weekly Social Engagements Jump by 53%

by Blockchain News

The much-anticipated Ethereum merge is set to see the light of day is about to begin, according to a Google countdown. 

With the crypto community waiting with bated breath to see how this event transpires, given that it’s the biggest software upgrade on the Ethereum network, the second-largest crypto was hovering around $1,603 during intraday trading. 

The merge is significant because it will transition the current proof-of-work (PoW) infrastructure to a proof-of-stake (PoS) consensus mechanism, deemed more environmentally friendly and cost-effective. 

Social engagements on the Ethereum network have also been going through the roof, with the weekly surge being 53.3%, according to market insight provider LunarCrush. 

Furthermore, ETH’s speculative activity has increased. Crypto insight provider Glassnode pointed out:

“Ethereum speculative action continues, with over $6.12B in outstanding Open Interest for Call Options. Put options account for a much smaller $1.5B, making for a Put/Call Ratio of 0.25.”

American multinational investment bank Citigroup or Citi recently pointed out that the Merge would slash the overall Ether issuance by 4.2% annually, making it deflationary, Blockchain.News reported. 

Meanwhile, crypto traders have been significantly shorting Ethereum relative to Bitcoin (BTC) in anticipation of the Merge. Glassnode explained:

“The spread between BTC and ETH perpetual futures funding rates is pushing to a new ATH of 77% annualized. This indicates traders are heavily short ETH relative to BTC, likely speculating/hedging for the upcoming Merge.”

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Source: Glassnode

Therefore, time will tell how Ethereum plays out in the post-merge era, with stakes high that it will become a deflationary asset.

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Bitcoin (BTC) $ 26,126.00 1.74%
Ethereum (ETH) $ 1,577.82 1.05%
Litecoin (LTC) $ 64.21 0.82%
Bitcoin Cash (BCH) $ 206.74 1.04%