In early May, we wrote an in-depth analysis of Ethereum’s merge, discussing the many technological and economic upgrades Ethereum will go through when its consensus layer finally transitions from Proof-of-Work (PoW) to Proof-of-Stake (PoS). This migration will cause a huge reduction in Ethereum’s power consumption (~99.95%), establish the infrastructure for the future implementation of sharding, and will update the network’s monetary policy, with a potential decrease of ~90% of the current issuance velocity of new ether (ETH). 

 

Since then, several objectives in the roadmap of Ethereum’s most important upgrade to date have been achieved, with the successful testnet merges of Ropsten in early June and Sepolia in early July, in addition to the announcement of the tentative date of September 19 for the final mainnet merge to occur. Next week, the new consensus layer (the Beacon Chain) of the flagship smart contract platform will go through its third and last merge test.

Görli will be the final testnet to activate PoS before the Ethereum mainnet fully switches to the new consensus mechanism, allowing developers to make the final adjustments regarding network functionality and overall stability in the new PoS environment. The final dry-run should take place between August 8 and August 11, and its success might imply we’re finally very close to the mainnet merge happening in mid September this year.

 

We believe Ethereum’s merge is a significant event for investors, likely driving a huge decrease in the liquid supply of ether and potentially leading to significant price appreciation. Moreover, other developments, such as scaling solutions like zkEVMs, will help to create new value for Ethereum as it seeks to maintain its position as the world’s leading smart contract platform.

 

 

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