The market is pricing for Ethereum's successful merger
2022September 15, the highly anticipatedEthereumBlockchain upgrade completed。 This super large-scale decentralized system with a market value of 200 billion US dollars, the most important network in the business history, has previously used the workload certification system of miners miningChange to a more energy-efficient equity certification system using pledge currency。
According to the analysis of Ouke Cloud Chain, The Merge is a "merger", which is one of the important steps in the upgrading process of Ethereum 2.0.The merger represents the combination of the existing executive layer (i.e. the current main network) of Ethereum and its new equity proof consensus layer beacon chain. The transition from PoW to PoS will reduce the energy consumption of Ethereum by 99.95%.
Teong Hng, co-founder of Satori Research, a digital asset platform, said that“The market is pricing for an almost successful merger.”Since the low point in mid June, Ethereum has risen by about 80%, far more thanBitcoin。 As of press release, the price of Ethereum was US $1618, up 0.36% in 24 hours.
The total number of open option contracts of Deribit at the exchange has increased from 1.2 million at the beginning of this year to more than 4.6 million yesterday. About 80% of these contracts are call options and the rest are put options.Some people even believe that the merger can help Ethereum replace Bitcoin and become the world's largest cryptocurrency.
After the merger is successful, is there a lot of selling?
On the question of whether there will be a lot of selling after the successful merger, the chain analysis company Nansen released a report "Ethereum merger: what you need to know" on Monday. Nansen found that today more than 71% of the pledgeETHIs in floating loss state, butThey exclude any short-term bearish impact that some investors believe。
Since the launch of beacon chain in December 2020, people have been able to lock their asset pledge ETH and obtain rewards in this process. So far, ETH worth about US $20 billion has been mortgaged, accounting for 11% of the supply of Ethereum. 65% of them are liquid pledges and 35% are non liquid pledges.
It is important that,ETH pledgers must lock their positions for 6 to 12 months until the so-called Shanghai upgrade in 2023.The Shanghai upgrading plan is carried out after the merger, which will enable the pledgee to withdraw from the pledge.The Ethereum Foundation also proposed a "withdrawal queue" to prevent large-scale selling.
Korpi, a self proclaimed DeFi educator, pointed out that,"Consolidation does not support withdrawal", "There are currently 395k verifiers (active+pending). If no new verifiers are set (extremely unlikely), it will take 424 days for all of them to exit."
Nansen recalculated these figures and found that if all the current ETH pledgers wanted to sell their pledged tokens, the queuing time would be extended by 300 days.
Nansen believes that,At present, the value of more than 70% of pledged ETH is lower than the value at the time of purchase, which may be a good thing, because the loss making ETH holders are unlikely to sell their assets to the market。 Only 18% of the so-called illiquid pledgers (those who use third-party pledges) "make a profit".
If the price of Ethereum remains above US $600, after the upgrade in Shanghai in 2023, non liquid pledgers are unlikely to sell. About 1 million ETHs are locked in this price, which may "not make the market fall".
Although it is impossible to sell pledged ETH on a large scale, it is still possible for those who have bought ETH with enthusiasm recently to sell it after the merger is completed, which is called "buying rumors and selling news"“
Nansen found that the worrying problem was that,Although there are a large number of verifier addresses (426k) and unique deposit addresses (~80k), about 64% of the pledged ETH tokens come from five entities.Among them, three are exchanges——Coinbase (COIN), Kraken and Binance - accounting for 30% of the pledged ETH. In addition, Lido holds about 31% of the largest pledge ETH, which is an open financial platform operated by a decentralized autonomous organization (DAO).
The high centrality of Ethereum pledge has raised concerns about Ethereum's "credibility and neutrality" and that the underlying transactions may be reviewed by the regulatory authorities. This is not groundless. Recently, the United States Treasury Department sanctioned Tornado Cash's mixed service litigation.About Ethereum Replacing Bitcoin
Niclas Sandstr ö m, CEO of Hilbert Group, an investment company, said that“In many ways, Ethereum is already the dominant cryptocurrency, because 70% of tokens are built on Ethereum.If the merger is successful, it will encourage more upgrading of Ethereum, which will make it a strong market value and become the dominant currency. "
Stefan Rust, CEO of Laguna Labs, a blockchain development company, said that Ethereum's medium and long-term prospects are brighter. He said in a report that Ethereum may exceed 3000 US dollars by the end of this year, and may realize the so-called "rollover" in time, and its market value may exceed Bitcoin.
However, many insiders believe that even if the merger is successful, Ethereum will not be able to shake the leading position of Bitcoin in the short term.
Alex Tapscott, Managing Director of Digital Asset Group of Ninepoint Partners, an alternative investment management company, said that in the long run, the future of Bitcoin is still very bright. He said that Bitcoin's "simplicity" may be its biggest disadvantage, because it cannot be programmed to do many different things. But in my opinion, it is also the largest asset. In my opinion, (Bitcoin) is a simple, immutable and highly secure means of storing value. It is completely decentralized and almost impossible to be captured by any single force, no matter the government or the company.
Although the Ethereum merger is not expected to make the network faster or lower transaction costs immediately, investors may see future benefits. "Although there is no definite result, in the long run, the merger may be beneficial to crypto investors because it lays the foundation for future upgrade speed, cost and ecosystem development," said Greg King, founder and CEO of Osprey Funds.
Faster transactions and lower costs may eventually bring more users, which may affect the value of Ethereum's native cryptocurrency.
MetaFi ecosystem Choise Vladimir Gorbunov, CEO and founder of. com, said that if the number of investors increased, the supply of Ethereum tokens should decline. As the supply of Ethereum decreases, the value of a single token may increase, which is good news for investors.