Like I’m sure many of you who are reading this, I woke up at the crack of dawn to join the 100’s of thousands of other people that tuned in for the Ethereum’s upgrade and migration from Proof-of-Work to Proof-of-Stake. I was very relieved for the whole crypto-community that the Merge went so well, and now that we’re a few days removed, I thought I’d share some of my observations on the merge.
$ETH isn’t really Ultrasound Money…or at least it won’t be all the time
Immediately after the merge, the supply change of $ETH dropped to just over -200 $ETH, signaling a promising sign to $ETH holders that there would be more $ETH burned compared to amount of $ETH issued, or in other words meaning that it was to become “Ultrasound Money.” If you’re unfamiliar with this term, it’s a play off of Bitcoiners calling bitcoin “sound money” as there’s a hard capped supply of 21 million $BTC. The term “Ultrasound Money” implies that $ETH was to be taken a step beyond that and actually become deflationary, or in other words making $ETH even a better store of value than something than $BTC which is hard capped.
However just a day after the merge, we’re seeing that with low usage of the Ethereum network, the overall supply of $ETH may instead still increase:
Throughout all the bullish promises that were advertised pre-merge, this was all done with the assumption that people were going to use it. My guess is that usage will eventually pick up again, but the increase in supply is still surprising to see, to say the least.
Slashing hurts
If you’re unfamiliar with “slashing,” it’s the penalty for $ETH validators that are helping maintain the integrity of the network. If a validator for whatever reason does something wrong or essentially breaks the rules, the validator gets slashed losing their $ETH. And consequently there was a validator that got slashed during the merge:
This unfortunate incident was due to a simple mistake, where the validator reportedly had a duplicate back-up node running when the merge began, causing him to get slashed, and booted losing 1 $ETH as a consequence. What I really think is unfortunate about this is that it seems to have been a genuine mistake and not some malicious attempt to threaten the integrity of the system; however, it doesn’t appear that the Proof-of-Stake algorithm is able to distinguish between mistakes and threats.
Picking up $ETHPoW (a.k.a. $ETH IOU, $ETHW) airdrops
If you’re unfamiliar with $ETHPoW, it’s basically the creation of the remaining pro-Ethereum Proof-of-Work users that wanted to retain PoW rather than upgrade to Proof-of-Stake which was implemented at the merge. If you had held your $ETH on an exchange you should check to see whether or not you’ve been airdropped any $ETHPoW already, as mine became immediately available , but only for withdrawals. Other exchanges like FTX allowed users to trade/sell $ETHPoW, but they restricted people from making any deposits to sell. Currently Coinmarketcap.com has the most comprehensive list of where $ETHPoW is available:
Once again, I imagine that many of these exchanges (like FTX and Midas) have different restrictions so be sure to check with whichever platform you want to use and see what those restrictions might be.
Claiming your $ETHPoW if it was held in your wallet: If your $ETH bags were held in your wallet, you can find instructions on how to claim them on EthereumPOW’s official twitter account
And because there’s a lot of people that still have their $ETH locked in platforms such as Celsius and Voyager, there’s a lot of disgruntled people out there that are now doubly frustrated that they won’t be able to get their airdrops either.
Nothing left to price in…except maybe for sharding
Although I’m bullish on Ethereum in general long term, it appears that given what we’ve seen with it’s latest price action, it looks like it’s being treated like an Olympic Stadium — a lot of fanfare and hype beforehand, and then abandoned and in disarray afterwards:
Conversely with the announcement of a definitive merge date, the price of $ETH was sent skyrocketing but already we have seen $ETH’s price crash down to lows that we haven’t had since late July:
Essentially for the past couple of months the market had bought the news of the merge, yet now that the news cycle is over, the mania appears to be over…well as least for now. Sharding is perhaps the next biggest upgrade for Ethereum to happen next, but from the project roadmap this is not slated to occur until 2023–24. And regardless of sharding, given as many were touting this as the biggest event in crypto since the inception of bitcoin, I personally don’t think that sharding implementation will have nearly as much fanfare.
$ETH Staking
Speaking of $ETH’s price action, I had read previously that $ETH stakers on services such as wouldn’t be able to get all their staked tokens unlocked immediately after the merge, but I hadn’t realized that that it would potentially be 6–12 months and that the lockup would continue. That being said, the Staking-as-a-Service opportunities appear to be growing, and now that we’re proof-of-stake, I can only imagine that the opportunities will continue to do so.
If you’re interested into looking at the main staking players for $ETH staking right now, then I recommend checking out SimpleStakers.info
Here you can see all the options including their relative market prices and earnable APY rate by time of unlock.
Conclusion
I’m greatly relieved that the merge was successful, and I’m extremely excited for the possibilities it now brings to new investors, new developers, and new adoptions. However I also believe that progress never runs in a clean straight line so I imagine that we’ll see a lot of bumps and turbulence in Ethereum’s future as it goes through its growing pains.
And as always, thanks again for reading, and if you haven’t already, please be sure to start following me here and on twitter to get all my latest updates: https://twitter.com/CryptosWith
Disclaimer: None of the content within this article is meant to be financial advice. Please do your own research and/or contact a financial advisor to find what investments might be best for you.
