Leading altcoin Ethereum is on the verge of a major upgrade that will result in a 90% drop in ETH supply. A crypto VC shares why the price of ETH and the return on stake could rise dramatically after the ‘merge’.
“Exciting development for the leading altcoin”
As a proven ‘ETH giant bull’ who has been in the Ethereum community since 2015, Vance Spencer on the upcoming Ethereum ‘The Merge’ looks pretty excited. The famous executive says:
The upgrade, called Consolidation, will officially see Ethereum’s transition from the Proof of Work (PoW) algorithm that powers Bitcoin to Proof of Stake (PoS).
PoW requires miners to expend large amounts of computational resources and energy to add new transactions to the Blockchain. But it is considered safer. PoS, on the other hand, requires validators to stake the cryptocurrency to organize transactions and create new blocks on the network. It is considered more energy efficient and decentralized, but may not be as secure as PoW.
As we mentioned in cryptokoin.com news, although “Merger” has been talked about since 2015, the network upgrade has been delayed many times. According to Spencer, the enthusiasm of the investors this time is palpable because there is ‘credibility’ that it will indeed happen in the second quarter of this year. What fuels optimism for the merger this time around is the emergence of the ‘Ethereum fee market’ in Spencer’s view.
What will be the advantages for Ethereum?
So what exactly will happen at the moment of merger? According to Spencer, there are two phases to the transition. In the first phase, the network will turn off PoW and turn on proof of PoS. After that, Ethereum holders will transact on the new PoS Blockchain. Right after the first merger, there will be two parts of Ethereum as well. Staked Ethereum locked on the bridge and still free-floating Ethereum. Stakers will not be able to withdraw the staked Ethereum until the old and new Blockchains officially merge in the second phase, which is estimated for some time in 2023. Spencer says:
It’s a production supply that’s too big to move. I think this is another reason why people are starting to pay attention not only to the technologically networking process, but also to what that means for the underlying entity.
The supply will decrease significantly as miners switch to holding their ETH to stake for staking rewards, rather than selling their newly minted ETH tokens immediately for profit. At the same time, according to Spencer, demand is likely to increase as institutional investors realize the profit potential in the Ethereum fee market.
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