ETH 2.0 Update: ETH staking has spiked after successful testing of The Merge
Recently, we’ve seen a potential rise in Solana adoption—how we’re experiencing another interesting trend in the world of cryptocurrency.
Ethereum (ETH) has recently joined forces with the Beacon Chain proof-of-stake system and since rumblings of this protective merge have begun, the rate of staking has risen quite significantly.
Here we look at the meaning of The Merge in more detail and consider what it means for the crypto industry.
What is The Merge and what does it mean?
As mentioned on the ETH 2.0 Update, The Merge is the joining of the existing Ethereum Mainnet with Beacon Chain.
The Ethereum Mainnet was secured by proof-of-work while the Beacon Chain ran in parallel, utilizing proof-of-stake. The Merge is the official marriage of these two systems.
This merging of these two systems offers greater scope concerning the proof-of-work and the proof-of-stake components of the ethereum ecosystem.
Now that these two systems are in the process of merging, this marks the end of Ethereum’s proof-of-work era, migrating ETH towards a greener, more sustainable future. The Merge is a notable milestone as it marks a significant step towards Ethereum realizing its fully secure and sustainable mission.
In fact, The Merge is touted to drive down daily ETH emissions from 12,000 ETH to 1,280 ETH—an incredible 90% dip which is the equivalent to a triple halving by Bitcoin standards.
At this point, developers are minimizing the addition of new system features (including the option to withdraw any staked currency) to ensure that The Merge is as seamless, successful, and efficient as possible.
As a result of The Merge, stakers will become assigned to validate the Ethereum Mainnet in a move that will make the pursuit of mining essentially redundant. Due to this systematic shift, miners will likely invest any profit or earnings into staking.
ETH 2.0 Update: The state of Ethereum staking since The Merge
Despite recent dips in the price of ETH, staking has experienced a sudden surge in recent months, with a growth of 25%.
ETH’s successful merge in mid-March prompted this significant spike in staked currency and by the end of Q2 2022, this trend represented around 9% of the overall Ethereum supply.
The staking value and feasibility of ETH is on the rise and providing this vital system migration continues to evolve without operational setbacks, this could well be the dawning of a new, more buoyant era for Ethereum.
Providing ETH doesn’t succumb to the ‘buy the rumor, sell the news’ trap, ETH is likely to prevail in the wake of The Merge, particularly due to its incredible scope for staking.
Kraken and LIDO are leading the staking services pack
ETH is certainly on the rise in the staking stakes, but recent crypto reporting figures show that Kraken (9.4%) and Lido (8.8%) still lead the pack as the top two ETH staking providers in terms of validator count. Both staking service providers boast a combined market share of around 18%.
Time will tell whether ETH will match or exceed the likes of Kraken and LIDO in staking market share, but at this present moment in time the situation is looking bright for the Ethereum camp.
The Merge continues
Speaking to CoinDesk, about The Merge, economist trader and analyst, Alex Kruger, said, ““I am very bullish on ether for the summer as ether staking would offer returns better than real or inflation-adjusted yields in traditional markets after the merge.”
It appears that investors are particularly interested in ETH’s new proof-of-stake model as it is likely to offer greater returns in the long term.
Another key benefit of ETH’s new proof-of-stake-centric system is efficiency: a streamlined operational framework coupled with less energy-intensive processes means that the new improved Ethereum is more than likely to be faster and easier to use. The upgraded mainnet system will also support smart contracts as well as staking transactions.
The success of the official Merge test run has turned the heads of miners and investors, particularly as yields are likely to rise above 10% once everything is finalized in June.
Final thoughts on ETH 2.0 Update and ethereum staking
In addition to the prospect of consistently healthy returns, the newfound eco-friendly nature of the merged system as well as its greater scope for scalability is set to secure ETH a sustainably bright future.
This poignant marker in the ETH journey is not only a seismic shift in the right direction, but it is a precursor for how the crypto colossus is going to expand its sustainability efforts in the coming years.
In conversation about The Merge with Fortune, ETH developer Tim Beiko said, “It won’t dramatically reduce gas fees. That won’t happen until the final stage in Ethereum’s massive technical upgrade, which is due at some point next year. The ‘Shard Chains’ upgrade will make the network more scalable, solving some of its congestion issues and thereby cutting transaction fees.
The Merge is highly anticipated by miners, investors, and blockchain enthusiasts alike. In fact, Google Trends suggests that search traffic for the term ‘The Merge’ is at its all time peak.
We will report more on the topic as news unfolds. In the meantime, read our study into why the general cryptocurrency market is down in 2022.
