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What’s Happening with ETH Approaching the Merge?
Ethereum revolutionized blockchain technology when it came out in 2015. By introducing the world to the concept of smart contracts, it exponentially increased the use cases of blockchain. Thanks to Ethereum, we are now able to use cryptocurrencies and tokenized assets in almost every industry known to human.
However, over the years, some shortcomings of its protocol have been addressed. One of the major updates to the network is the upcoming merge, where Ethereum will completely switch to a PoS consensus model, completely replacing the current PoW algorithm. This will make the ETH vs BTC discussion even more interesting!
But what does this mean for Ethereum and its token ETH? Is this evolution beneficial to the ecosystem as a whole? In this article, we try to answer these questions by doing a deep dive into Ethereum’s protocol. Let’s dig in.
What Is the Ethereum Merge?
The pioneering status has allowed Ethereum to gain incredible popularity in the smart contract niche. While there are many other networks that provide similar services today, Ethereum remains the #1 network for decentralized applications.
However, this popularity also came with its set of caveats. The Ethereum PoW network doesn’t scale very well with mass usage, which has resulted in slow transaction execution. Moreover, gas fees for interacting with smart contracts have skyrocketed. As a result, the adoption of DeFi and NFTs on a mass scale has been effectively hindered on the network.
For this reason, the Ethereum developer community has been working on a full migration to a much more scalable PoS consensus. In this environment, miners are not needed anymore, which decreases the energy requirements of the network by more than 99%.
What’s more, the network will increase throughput significantly to up to 10,000 transactions per second, compared to the current 30. This should allow the Ethereum network to compete with the most modern current blockchains.
Worth noting is that users will be able to stake their ETH and get passive rewards for this. This has democratized the network even further and increases decentralization.
How Is ETH Price Doing?
Since the beginning of the year, the crypto market has been suffering, and Ethereum followed suit. The price has dropped from $3,700 in January 2022 to a 2-year-low of $994 in June 2022. However, the announcement of the merge has been increasing, buying pressure from investors.
The price has hence been in a steady uptrend and has recently reached the $2,000 level. Many analysts predict that it will continue to rise prior to the merge and even might skyrocket once it’s successful.
For instance, Priceprediction.net expects the price to reach as high as $7,300 by 2025, which would almost double its current all-time high. Long-term predictions are even more bullish, with forecasts of around $47,000 by 2030.
How Will the Merge Play out Further?
The merge is just one step towards making Ethereum a more scalable chain. In 2023, the developer team is supposed to release the sharding update. This technology will allow the current beacon chain to govern with sharded side-chains.
These chains will provide app-specific computation, allowing the Ethereum blockchain to decuple its speed and reach 100,000 transactions per second. At the same time, these chains will use shared security from the beacon chain, making them highly resistant to attacks, unlike the current layer-2 solutions that exist today.
This will push Ethereum to becoming a genuine internet of blockchains that will be scalable at a mass level. Consequently, additional users wouldn’t impact the chain’s capacity.
Should You Invest in Ethereum Today?
Ethereum carried the burden of PoW consensus for a long time. This hindered the adoption of the network and fueled the detractor’s narratives regarding its impact on the environment. However, switching to PoS, Ethereum will simultaneously become the most used and one of the fastest blockchains available.
The merge will greatly enhance its capabilities to provide dApp developers with a scalable platform that is both environmentally friendly and cost effective. As a result, we can expect the ETH token to continue to grow in value and reach new heights in the future. You can buy ETH today on Godex, which provides you with full anonymity.
