CoinMetrics Recommendations for Ethereum (ETH) Users on Merger Day

As the Ethereum (ETH) Merger approaches, there is growing debate around the risks posed by the event: the crypto researcher Corner Metrics in particular points to price discrepancies in DeFi protocols as an obvious danger, and advises users to refrain from any transactions on the day of the merger.

Source: Adobe/Mohd Azrin

In a new article entitled Mapping Out The MergeCoin Metrics points out that while the merger will bring many benefits to Ethereum overall, “a lot can go wrong during a network migration of this magnitude.”

As an example, the firm, which has been running its own validating nodes on Ethereum’s new “Beacon chain” since 2020, said the merger that took place on the Goerli testnet happened two times on its nodes. “This could have disrupted uptime if this was the actual meltdown,” the article adds.

The merge on the Goerli testnet took place at the beginning of August this year and represented the last test before the actual upgrade which should take place between September 10 and 20.

In its post, Coin Metrics suggests users avoid transacting on the Ethereum network on the day of the merger, given “the myriad of factors that can adversely affect Ethereum’s uptime.”

Among the possible risks, the article mentions a change in the order of blocks on the chain, known as a “reorg”. If that were to happen, “a large number of transactions could be sent back to the mempool and get stuck,” analysts warned, adding that it could cause significant network disruptions.

Additionally, users should be aware of the potential for delays during the transition from the old Proof of Work (PoW) chain to the new Proof of Stake (PoS) chain. Analysts went on to explain that this can potentially lead to price discrepancies in DeFi protocols, decentralized exchanges (DEX) and on-chain lending markets.

“While these can generate generous payouts in [valeur maximale extractible – VME]they could also have a negative impact on regular users,” Coin Metrics pointed out, referring to the value that validators can extract from users by reordering, inserting or censoring transactions in blocks.

However, Coin Metrics said that despite the risks, the merger marks a new chapter for Ethereum that could potentially bring “a host of exciting new scalability solutions” to the most popular smart contract network.

1662032366 70 CoinMetrics Recommendations for Ethereum ETH Users on Merger Day
Source: Coin Metrics

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CoinMetrics Recommendations for Ethereum (ETH) Users on Merger Day


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