• “Görli” test network successfully converted
    • Ethereum merge probably on September 15th
    • 99.95 percent less energy consumption after conversion

    Long-awaited Ethereum merge in September

    In the crypto world, all eyes are currently on the upcoming Ethereum merge. After the last large test network of the blockchain, which goes by the name “Görli”, was successfully converted to the “Proof of Stake” (PoS) process at the beginning of August, the conversion of the existing “Proof of Work” technology advanced (PoW) based blockchain much closer. Just one day after the successful test run, Ethereum developer Tim Beiko then set the day for the final merge to September 15, 2022, as your GitHub entry shows.

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    The price reaction to the successful test run in the Görli network was not long in coming. While the market for cryptocurrencies has been under pressure again and again, the Ether course in particular has recovered significantly after the announcement of the successful implementation.

    Ethereum is getting greener

    For many investors, the upcoming merger will make the cybercoin more attractive. For example, interested parties who have previously refrained from making an investment due to the high energy requirements could dare to get started. After the merger of the existing network and the lower-energy PoS method, the Ethereum blockchain will have 99.95 percent lower energy consumption, the developers of the Ethereum Foundation announced in May 2021.

    But how should investors who already hold ether in their wallets react?

    But not just “Proof of Stake”?

    According to Cointelegraph, the most straightforward strategy for ether investors is to do nothing. A hard fork of the Ethereum blockchain could possibly split the network into PoS and PoW variants – similar to what happened in 2017 when Bitcoin was split into Bitcoin Cash. In this case, the ether coins under the existing ETH abbreviation would represent the new version, while additional ETHPOW coins would migrate to the corresponding amount in the wallets of the investors. Should this happen, selling the new, “free” tokens would be an attractive source of income, the portal continues. According to “BTC-ECHO”, this is only possible if the ether coins are stored in a non-custodial wallet during the merge. Although it is currently not clear whether there will be a split, the idea of ​​a PoW Ether has already received support from previous Ethereum miners.

    Drive for Layer 2 solutions

    After the successful merger, various updates should strengthen the network, according to BTC-ECHO. The focus here could be on Layer 2 solutions in particular, which on the one hand process transactions outside of the mainnet (Layer 1), but at the same time benefit from the decentralized security model of the main network. The changeover could allow such projects to be scaled even better, as the portal writes. Therefore, it is likely that ETH-L2 projects will gain popularity and handle more transactions once the Ethereum network has switched to PoS. In this way, transaction fees could also be reduced, which favors the development of decentralized applications (dApps) that were previously too expensive to maintain. Layer 2 blockchains such as Optimism (OP), but also dApps such as Synthetix Network (SNX) or Uniswap (UNI) could be interesting for investors.

    Liquid staking apps

    According to BTC-ECHO, the liquid staking industry could also benefit from the merger. Providers such as Lido Finance or Rocket Pool enable users to stake Ethereum without having to set up their own node. You can deposit ETH into a DeFi protocol and receive tokens from the corresponding provider in a one-to-one ratio. These are used to claim staked tokens and automatic rewards. The liquid staking companies keep a part of these bonuses as profit. Because profit margins could increase after the merge event, such applications show high potential for investors, according to BTC-ECHO. In addition to Lido Finance (LDO) and Rocket Pool (RPL), Stakewise (SWISE) can currently also be traded.

    hedging mechanism

    But there is also a suitable investment strategy for skeptical investors, as Cointelegraph shows. The success of the merge event is not guaranteed, and even with a smooth transition, the crypto market could be burdened by external factors. So it may be worth taking or holding a long position on ETH coins while being short on Ethereum futures. With the help of this strategy, also known as “hedging”, you can bet on both rising and falling prices.

    Stablecoins as an alternative

    However, if investors are not enthusiastic about all these possibilities, they can initially focus on stablecoins, Cointelegraph continues. This would be particularly worthwhile for investors who currently fear that recent price jumps before the merge after the event will no longer be sustainable and that ether will rush into the red despite a successful transition. In this case, you can still strike at bargain prices and benefit from the long-term potential of the switch.

    Editorial office finanzen.net

    This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.

    Image sources: Ponderful Pictures / Shutterstock.com, Wit Olszewski / Shutterstock.com

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