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Ethereum Merger Successful – What Impact Will It Have on Traders and the Global Crypto Market? – The daily newspaper Hodl

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After months of speculation, the long-awaited Ethereum (ETH) merger finally took place on September 15, 2022. The merger saw the popular blockchain network shift from its hardware-based PoW (proof of work) model to a more environmental model. user-friendly PoS (proof of stake) template.

The merger will see the Ethereum blockchain reduce its carbon footprint by 99.9%, resulting in faster transactions and lower fees. So what are the implications of this merger and how will traders be affected?

Understanding the Ethereum Merger

Like most cryptocurrencies, Ethereum follows a decentralized governance system. All decisions regarding the blockchain protocol now belong to the community. In early 2020, the community decided to change the PoW mechanism of the blockchain to PoS to reduce power consumption and speed up transactions.

Following the decision, the ‘Beacon Chain’ a test bed for the PoS mechanism was launched on December 1, 2020. The Beacon chain operated in conjunction with the leading PoW-based Ethereum chain, and its goal was to test the potential consequences of switching to the PoS model.

Over 400,000 validators have collectively staked over $23 in ETH on the chain. It was a success as the Beacon chain showed that Ethereum could support the PoS system.

Fast forward to September 15, 2022 the Beacon chain was merged into the Ethereum mainchain, replacing the old PoW system. As the merger was successfully completed, we are now officially upgraded to Ethereum 2.0.

However, the upgrade also created a new fork of the blockchain and forked tokens EthereumPoW or ETHW. Why was this fork created?

Although the majority voted to switch to the PoS system, a large part of the community still wanted to stay on the PoW model. Most of these community members are ETH miners who think the new upgrade will drive them out of work. –bBecause a PoS mechanism does not require hardware-based mining.

The EthereumPoW fork allows them to keep their profits. ETHW is the new native token for this forked network.

Some of the current ETH owners will also receive ETHW airdrops, which will be supported by some of the major crypto exchanges in the industry. These exchanges have also listed ETHW for spot trading on their platforms.

What are the benefits of Ethereum merger

Since the PoS system does not require hardware-based operations, Ethereum trading fees will decrease significantly and network speed will increase.

The Ethereum mainnet not only hosts ETH tokens, but also hundreds of other cryptocurrencies known as ERC-20 tokens, including some of the most popular coins such as USDT, LINK, and Wrapped Bitcoin. These tokens will now take advantage of the PoS model and merchants will benefit from reduced transaction fees.

The Ethereum blockchain also hosts NFTs (non-fungible tokens). Thus, the NFT transaction fees will also decrease. The most important benefit of the merger is that the energy waste of the crypto industry will decrease significantly.

We are currently entering a critical global energy crisis. Thus, an energy efficient PoS system will definitely attract more new users.

Following the upgrade, Ethereum also announced plans to partition and purge, decreasing the total long-term supply of ETH, making the altcoin more profitable for long-term holders. Bitcoin is often dubbed “digital gold” due to its limited supply. We may see the same apply to Ether shortly.

It could also have a very positive impact on the market. As the merger was successful, Bitcoin remains the only top-tier coin to use the PoW model. This shows that the crypto industry has matured technologically, legally, and ideologically.

More users will now be interested in keeping their assets long-term, which means less liquidation and less long-term volatility. Additionally, the prospect of becoming a validator will inspire users to increase their crypto assets.

According to its founder Vitalik Buterin, there is a multi-year roadmap ahead of Ethereum after the merger. The next big step in the upgrade is called “the surge,” which will see the network split into smaller chunks to aid scalability and increase transaction speed.

What are the risks of Ethereum 2.0

No innovation comes without risks and challenges. Migrating to a PoS model means only the fortified “wealthy” can potentially become a validator.

In Ethereum, validators are required to deposit at least 32 ETH. Thus, there is a risk that wealthy whales will replace conventional miners, which is contrary to the idea of ​​decentralization.

There are also risks of negative funding. Traders can potentially buy ETH in spot markets and receive airdropped ETHW from time to time. For this reason, some traders may enter excess short positions in perpetuals and futures contracts, triggering negative funding.

It is also important to understand that PoS validators are new and much less experienced than miners. Thus, we might see problems appearing on the network from time to time.

Overall, the Ethereum merger is a monumental milestone for the entire crypto industry. Although there are risks, the potential economic benefits of this upgrade are significant. Only time will tell if this potential is realized.


Adam O’Neill is Director of Marketing at Bitruea veteran of the Asian tech sector.

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Disclaimer: Opinions expressed on The Daily Hodl are not investment advice. Investors should do their due diligence before making high-risk investments in Bitcoin, cryptocurrency or digital assets. Please note that your transfers and transactions are at your own risk and any loss you may incur is your responsibility. The Daily Hodl does not recommend the buying or selling of cryptocurrencies or digital assets, nor is The Daily Hodl an investment adviser. Please note that The Daily Hodl engages in affiliate marketing.

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