3 Winners and 2 Losers from the Ethereum Merger

The Ethereum merger is expected to take place around September 15th and may become one of the most important historical moments in Ethereum's history. Although the crypto ecosystem will benefit from it, not everyone will be a winner. We have sorted out the 3 potential biggest winners and 2 big losers. Let's take a look.

The biggest winner after the Ethereum merger: ETH

The biggest impact of the merger on Ethereum is that the market value of ETH is likely to surpass BTC and become the new king of cryptocurrencies . Although this potential impact seems far-fetched to some people, there is no doubt that the price trend of ETH after the merger has been concerned by market participants. According to Coingecko data, although the current ETH price is still far from the historical high of $4,878.26, it has increased by 10.3% in the past 7 days, while BTC has increased by 8.0% in the same period.

On the other hand, after the Ethereum merger, ETH will be more closely linked to macroeconomic factors. Chris Terry, vice president of enterprise solutions at SmartFi, said that in the long run, the world needs a more efficient blockchain, so ETH will be the ultimate winner, but having said that, due to macroeconomic influences, no matter how good the proof-of-stake consensus mechanism is after the merger, ETH's trend may still have some risks in the context of a global economic slowdown and a stock market crash.

Two other winners from the Ethereum merger: DeFi and NFT

Today, hundreds of DeFi ecosystem projects are built on the Ethereum blockchain, as are many NFT projects, and the Ethereum merger will be one of the biggest drivers of DeFi and NFT growth.

At present, the hardware and energy required to mint NFTs are relatively large, and many environmentalists even describe it as "minting an NFT is like burning a forest." After the merger, the energy consumption of the Ethereum blockchain will be greatly reduced. Santiago Portela, CEO of FITCHIN, said: "The merger is just the first step in the expansion of Ethereum, and eventually the entire network will become cheaper, faster, and easier to use. Of course, the merger is the cornerstone of all this, and this cornerstone is crucial for services such as DeFi and NFTs, because both DeFi and NFTs require faster and cheaper blockchain support. In short, all applications that rely on Ethereum will eventually benefit from this transition to proof of stake."

GOGO Protocol founder Krugljakow added: “While the merger itself will not immediately make Ethereum faster or cheaper, it lays the foundation for subsequent upgrades. That’s why it is such an important event.”

The biggest losers after the Ethereum merger: PoW miners

As mentioned above, after the merger, Ethereum will switch from the Proof of Work ( PoW ) consensus mechanism to the Proof of Stake mechanism, and energy consumption will be reduced by 99.95%, which means that most expensive and energy-intensive mining machines will become useless, and miners will become the biggest losers after the Ethereum merger. Freddy Zwanzger, head of the Ethereum ecosystem at crypto infrastructure company Blockdaemon, bluntly stated:

“The biggest losers after the Ethereum merger are PoW miners. Although they may try to build PoW-ETH, this approach will not be successful in the long run. Validators who stake ETH will obviously benefit from higher rewards.”

According to the 2022 Digital Asset Outlook Report released by The Block Research, Ethereum miners generated $16.5 billion in revenue, a year-on-year increase of 678%, a record high, mainly due to the surge in NFT activities in the second and third quarters, which led to an increase in transaction fee income. In fact, Ethereum hardware miners have invested billions of dollars in hardware equipment, which will soon become useless once the merger is completed, and they will need to migrate to mining other crypto assets, which are obviously much less profitable than ETH.

Another loser from the Ethereum merger: speculators

It should be noted that although the Ethereum merger will bring many positive changes to the network and ecosystem, the upgrade process is still very complex and there is great uncertainty, which may lead to increased volatility in the crypto market. Therefore, speculators who want to take advantage of the merger may ultimately end up in failure.

Andy Bromberg, CEO of ECO, explained: “Given the complexity of the merger technology, unexpected problems may arise. Although the testnet merger went smoothly overall, there are still unknown risks in this scale of migration. Secondly, centralized and decentralized products - whether it is a lending agreement or an exchange - may encounter problems with forks . After the merger, there will suddenly be multiple blockchain chains coexisting, which may also bring a series of problems.”

Not only that, the uncertainty surrounding the Ethereum merger is likely to have a "ripple effect" that will eventually spread to Bitcoin and the broader crypto market, causing "a lot of chaos" in the entire crypto/DeFi field, so those who want to speculate in the process may face huge risks.