Ethereum's upgrade Merge is on the way, Defi investors optimistic
Premium- Ethereum co-founder Vitalik Buterin has revealed that the Merge upgrade is set to take place in August.
Decentralized finance (DeFi) investors keenly await on Ethereum’s revamp to escape from the crypto market's nearly two months long bearish tone. The market has corrected steeply and so has Ethereum which is currently trading below the $1,800-mark. Investors' confidence has been volatile tracking the global macro backdrop.
Ethereum is the second-largest cryptocurrency in the market after Bitcoin.
According to a Bloomberg report, the DeFi sector, where investors earn yields by trading and staking cryptocurrencies without centralized intermediaries, has declined sharply following the collapse of the TerraUSD stablecoin, and as soaring inflation puts the Federal Reserve on a path of monetary tightening. The Ethereum “Merge," one of the most significant technical upgrades to the blockchain since its inception in 2015, maybe one of the few catalysts that could give DeFi a much-needed lift.
Ethereum co-founder Vitalik Buterin has revealed that the Merge upgrade is set to take place in August.
Under the upcoming upgrade, the current Ethereum Mainnet will "merge" with the beacon chain proof-of-stake system. This will mark the end of proof-of-work for Ethereum and the full transition to proof-of-stake. Also, this is planned to precede the rollout of shard chains.
On its website, Ethereum mentions that the Merge shipping will be during Q3/Q4 2022. It said that this upgrade represents the official switch to proof-of-stake consensus. This eliminates the need for energy-intensive mining and instead secures the network using staked ether.
Notably, Ethereum Mainnet continues to be secured by proof-of-work, even while the Beacon Chain runs in parallel using proof-of-stake. The Merge is when these two systems finally come together.
Further, Ethereum on its website has stated that it is important to note that an implementation goal of The Merge is a simplicity to expedite the transition from proof-of-work to proof-of-stake. Developers are focusing their efforts on this transition, and minimizing additional features that could delay this goal.
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"This means a few features, such as the ability to withdraw staked ETH, will have to wait for a little longer after The Merge is complete. Plans include a post-merge "cleanup" upgrade to address these features, which is expected to happen very soon after The Merge is completed," Ethereum said.
Further, the Bloomberg report said that the Merge will be the most important event in the crypto space this year by far, said Vance Spencer, co-founder of venture capital firm Framework Ventures. “If you think about how crypto markets usually move, the biggest event is usually Bitcoin halving, cutting the supply of Bitcoin in half," he said. “Here, we have the supply of Ethereum getting cut by 90% in one moment."
On CoinMarketCap, Ether is trading currently at $1,796.91 up 1.3%. The coin has touched an intraday high and low of $1,800.47 and $1,721.26 respectively. Its market cap currently stood at around $217.35 billion.