Nevertheless, many market participants are optimistic about the long-term prospects of Ethereum and its native cryptocurrency.
“Previously, we have spoken with sovereign wealth funds and central banks to help them build their digital asset allocations…but direct investment was voted down due to energy concerns,” said Markus Thielen, chief investment officer at asset manager IDEG Limited.
“With Ethereum moving to PoS, it clearly solves that last pillar of concern.”
Some cryptocurrency investors are now turning their attention to the next event that could shake up prices.
The next significant upgrade for Ethereum is the “Shanghai”, expected by market participants in about six months, which aims to reduce its high transaction costs.
It would allow validators, who have deposited ether tokens on the blockchain in exchange for a return, to withdraw their staked coins, to hold or sell them.
The stakes are high: more than $20 billion in ether deposits are currently locked, according to data provider Glassnode.
The pledged ether cryptocurrency coin – seen as a bet on Ethereum’s long-term success as it cannot be redeemed before Shanghai happens – is trading near parity with ether at 0.989 ether , according to data from CoinMarketCap, indicating confidence in future upgrades.
The coin had fallen as low as 0.92 in June.
PURGE AND SPLASH
Beyond Shanghai, a host of other upgrades are planned for Ethereum, which co-founder Vitalik Buterin has dubbed “the surge,” “verge,” “purge,” and “splurge.”
The main focus of future updates will likely be the blockchain’s ability to process more transactions.
“Because the merger has been delayed for several years, investors, traders, and end users have great trepidation about when Ethereum will expand significantly,” said Alex Thorn, head of research at Ethereum. from the company to the blockchain-focused bank Galaxy Digital.
Paul Brody, Global Head of Blockchain at EY, said, “The future of Ethereum must, and will, scale to hundreds of millions of transactions per day.”
The main goal of the merger was to reduce the energy consumption of Ethereum, as cryptocurrencies are criticized for their massive carbon footprint. According to the developers, the energy consumption of the blockchain has been reduced by around 99.95%, which could appeal to powerful institutional investors, previously limited by environmental, social and governance (ESG) concerns.
According to Adam Struck, CEO of venture capital firm Struck Crypto, the merger and future updates also reduce the investment appeal of so-called “Ethereum killer” blockchains like Solana and Polkadot.
However, institutional investors are not yet taking the plunge as a daunting macro environment dampens risk appetite.
In the longer term, however, the shift to PoS is expected to reduce the rate of issuance of tokens into ether – potentially up to 90% – which should drive prices higher.
Additionally, annual returns of 4.1% for staking ether tokens to validate transactions could prove tempting for investors.
However, while the proof-of-stake method enables these lucrative returns, many crypto purists point out that it moves Ethereum away from a purely decentralized model, as larger validators could wield greater influence on the blockchain.
For now, however, the Ethereum world might be advised to enjoy the moment of the merger.
“There could be some volatility in the days ahead,” analysts at Kaiko Research said. “But for now, the community can take a well-deserved victory lap.”
(This story has not been edited by blogdudemocrate.org staff and is auto-generated from a syndicated feed).
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After the merger, Ether is heading for a $20 billion explosion in Shanghai. – Democrat Blog
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