Why You Should Watch the Ethereum Merge Closely

Why You Should Watch the Ethereum Merge Closely

Traders could expect continued momentum in the Ethereum ecosystem with opportunities to invest and trade, as the merge with the Beacon Chain shows no signs of delay. Cointelegraph reported that the Goerli testnet merge has been finalized without any major issues. After several consecutive successes across testnets, the market is pricing in the  Ethereum Merge by mid-September.

We spoke with , Mitchell Nicholson to discuss how traders and investors could benefit from this recent development. For starters, he highlighted that the successful testnet merges, most recently the Goerli, reduces the technology risks and uncertainty.

“The Merge will enable more momentum in the Ethereum ecosystem, with good opportunities to invest and trade. For example, the LDO has seen significant volume growth since Lido is the largest liquid staking provider. Another project gaining traction is Optimism, which is the leading roll-up scaling solution with a liquid token launched. Similarly, activity in the Arbitrum ecosystem has grown with projects like GMX and Dopex. Most notably, the leading DEX Uniswap is considering turning on a fee switch that would provide fees to UNI token holders,” Nicholson explained.

“In my view,  many investors and traders will continue to transition their interest back to the Ethereum ecosystem from Alternative Layer 1s.,” Nicholson noted.

More sustainable tokenomics

Nicholson also said a successful Merge will result in more sustainable tokenomics for ETH with less inflation since token compensation to validators will be lower than miners. Combined with burns driven by network usage from EIP-1559, net issuance of ETH could converge to zero and become deflationary in the long-run.

He said the Merge could also be good for institutional investors who have an ESG mandate, as it is expected to result in drastically-reduced carbon emissions. While miners consume a substantial amount of power during operations, the footprint from validators will be significantly lower as evidenced by other POS blockchains like Solana and Avalanche.

Before joining WOO, Nicholson held positions as an Economist at the Bank of Canada and a Manager in the Cryptoasset and Blockchain Practice at KPMG Canada.

  • The European Central Bank (ECB) has set the foundation for harmonizing the licensing requirements for crypto in Europe. In a report by Cointelegraph, the ECB said it would consider crypto firms’ business models, and internal governance, along with coordinating with national Anti-Money Laundering (AML) authorities of respective countries to provide data necessary to assess potential risks.
  • Meanwhile, email marketing service, MailChimp,has suspended  digital currency-related accounts without prior notification. Notable entities who were reportedly suspended unannounced include Messari, Edge Wallet, and Decrypt.
  • In Brazil, XP Inc. officially opened its crypto trading services, as the latest Brazilian fintech player to offer crypto trading services, following Nubank and MercadoLibre. XP Inc’s 3.6 million clients will have access to Bitcoin (BTC) and Ether (ETH) trading.
Security incidents you need to be aware of
  • Due to a “misconfiguration” of its newly-launched iBTC/aUSD liquidity pool, hackers were able to mint 1.28 billion aUSD, said Acala Network. In a tweet, the company said “the sudden influx of coins caused the stablecoin to depeg in mere minutes.”
  • Curve Finance became the latest platform to be compromised after a domain name system (DNS) hijacking incident. Attackers managed to siphon $537K worth of USD Coin (USDC) in the time it took to revert the hijacked domain.
  • The developers behind Blur Finance, a yield aggregator based on BNB Chain and Polygon, appear to have suddenly abandoned the project and vanished along with $600,000 worth of tokens.

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The content above is neither a recommendation for investment and trading strategies nor does it constitute an offer, solicitation, or recommendation of any product or service. The content is for informational sharing purposes only. Anyone who makes or changes the investment decision based on the content shall undertake the result or loss by himself/herself.

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