Bankless: Don’t Ignore Ethereum’s Merge That Hasn’t Been Priced In

Why did the merger happen in June and what does it mean for ETH?

Three months until merger

SuperPhiz is an active member of the EthStaker and Rocketpool communities, and pays more attention to the minutiae of merging than anyone I know (besides the developers themselves).

On the r/EthStaker subreddit, SuperPhiz detailed 5 indicators that the merger will happen in June.

  1. The planned “difficulty bomb” will arrive in mid-June.
  2. Danny Ryan says there is no need to delay the difficulty bomb.
  3. The mainnet merge preparation checklist is nearing completion.
  4. Developers are picky about latency.
  5. The Kiln testnet is testing the merge.

Barring some major unforeseen issues, we’re seeing an increasing likelihood of a merger in June.


That means there are only 3 months left.

The importance of this blockchain network upgrade is unprecedented, and it may be difficult for latecomers to surpass it.Longtime Bankless readers and listeners certainly know the importance of the merger and its imminent arrival. But I’m not sure the rest of the crypto industry knows , let alone the world outside of crypto.

If Ethereum achieves its goal of becoming the global settlement layer of the Metaverse, the Ethereum merger will be one of the most historic events of our time.

But for most people, it doesn’t even require registration.

Just as many of us older people think back to the days of dial-up access to the Internet.

Our kids will think it’s crazy to transact on Ethereum, which still has PoW consensus.

Bankless: Don't Ignore Ethereum's Merge That Hasn't Been Priced In

One of my hobbies is daydreaming: “If $ETH is priced at $x and the staking yield is x%, how much annual income will I earn?” Luckily, you can use this to calculate, we’re here to teach you How to do it.

Most people think ETH will go to $10k or even $20k…

$10,000 is bearish.

$20,000 is FUD.

This is a reminder not to have high expectations.

Merged ETH

There are currently 10.5 million ETH pledged in the beacon chain, and the rate of return calculated on the ETH currency standard has reached a considerable 4.8%.

Once this 10.5M ETH is merged with the PoW Ethereum chain, the yield will rise from 4.8% to ~10-15%. Returns increased 2-3 times :

  1. The incentive to hold ETH increases by 2-3 times.
  2. The incentive for staking ETH is increased by 2-3 times.

At the same time, new ETH issuance was reduced by 90%.

Currently, retail PoW miners earn 12,000 ETH a day and are forced to sell a significant portion of it to pay for electricity bills.

After the merger, PoS validators will earn 1,280 ETH per day, and there is no reason to sell ETH to cover operational costs.

Our daily issuance decreased from 12,000 to 1,280 ETH and the daily selling pressure dropped from thousands of ETH to 0.

How much ETH will be staked due to the increased yield? Now that a lot of regular selling pressure will dry up, where will ETH come from?

What price did it turn out to be?

These answers will be available in about 3 months.

Bankless: Don't Ignore Ethereum's Merge That Hasn't Been Priced In

Triple halving ends bear market

A common belief among Bitcoin believers is that the Bitcoin halving is what drives the crypto market cycle. Every 4 years, we have a bull market that starts with the Bitcoin halving. The reduction in bitcoin issuance has reduced the flow of new supply into the secondary market, and a bull market has gradually emerged as the remaining liquid supply of bitcoin in the secondary market dries up.

Bankless: Don't Ignore Ethereum's Merge That Hasn't Been Priced In

If the Bitcoin halving is really the reason for the crypto market cycle, the implications of the Ethereum merger would be huge .

  1. The Bitcoin halving reduces the new Bitcoin supply by 50%. 
  2. The Ethereum merger reduced the new ETH supply by 90%.

The merger has been dubbed the “triple halving” because Bitcoin needs to go through three halvings to produce a supply reduction of the same magnitude.

It will take Bitcoin 12 years to do what Ethereum will do in the next 3 months.

If you believe in the idea that Bitcoin halving will spark a bull run, imagine what would happen with a triple halving.

The last Bitcoin halving was in May 2020, when the reward per Bitcoin block changed from 12.5 BTC per block to 6.25 BTC per block. At $8,000 per bitcoin, the halving removes the $3.6 million daily selling pressure on bitcoin, making it easier for the price to rise.

Ethereum currently produces about 12,000 ETH per day, or about $30 million per day in security costs. The Ethereum merger reduced daily output by 10,720 ETH while also removing the selling pressure of 1,280 ETH per day . Since stakers don’t need to consume electricity, they don’t have to sell their ETH proceeds.

If removing the $3.6 million daily BTC sell-off was enough to trigger a bull market, what would happen to removing the $27-$30 million daily ETH selling pressure?

Bankless: Don't Ignore Ethereum's Merge That Hasn't Been Priced In

I surprised my audience by expressing my pessimism about crypto markets for the first time in my weekly roundup last week.

Commodity markets, geopolitical risk, inflation, nuclear war, and the loss of momentum in crypto all the way through 2021 are all bearish reasons to me.

I expect the crypto market to develop in a way that completely ignores the fundamentals of consolidation, that a bear market will overpower all price performance, no matter how bullish an individual asset is.

This means that the merger is not reflected in the price.

They don’t understand its importance and don’t see it coming.

You heard it here. When ETH starts setting a new ATH after the merger, I’ll repost the link to this article and say:

Bankless told you.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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