Ethereum’s mega-upgrade is a game-changer

The merge came, saw and conquered. The mega-upgrade for the Ethereum blockchain went live on September 15, moving it to a less energy-intensive proof of stake PoS system with hardly a hiccup.

The anticipation of the event had seen ether rise by about 85% from its June doldrums, but it has since fallen 19%, due to investor angst over inflation and central-bank policy.

Many market players are very positive about the long-term prospects ofEthereum and its native criptocurrency.

We talked to central banks and sovereign wealth funds to help build their digital asset allocations. Markus Thielen, chief investment officer at IDEG Limited, said direct investment was voted down due to energy concerns.

This last pillar of concern is solved by moving to PoS with the move toEthereum. Some investors are turning their attention to the next event that could shake up prices.

The Shanghai upgrade is expected to be completed in around six months, and is aimed at reducing its high transaction costs.

It would allow validators who have deposited ether token on the blockchain in exchange for a yield to withdraw their staked coins, to hold or sell.

According to Glassnode, there is a lot at stake: over $20 billion of ether deposits are currently locked up.

According to CoinMarketCap, the staked ether coin is viewed as a bet on Ethereum's long-term success, as it cannot be redeemed until Shanghai happens. The coin is trading at nearly parity with ether at 0.989 ether, indicating confidence in future upgrades.

The coin had dropped as low as 0.92 in June.

There are a lot of upgrades planned forEthereum, which is co-founder Vitalik Buterin and has nicknamed the surge verge purge and splurge. The primary focus of future upgrades is likely to be on the ability to process more transactions.

Because the merger was delayed for several years, investors, traders, and end-users have a lot of trepidation around whenEthereum will scale, according to Alex Thorn, head of firmwide research at Galaxy Digital.

Paul Brody, global leader at EY, said thatEthereum's future needs to scale to hundreds of millions of transactions a day. The goal of the merger was to reduce Ethereum's energy usage as cryptocurrencies come under fire for their massive carbon footprint. The developers claim that the energy consumption of the block chain was cut by an estimated 99.95%, which could tempt powerful institutional investors, who were previously constrained by environmental, social and governance ESG concerns.

Adam Struck, CEO of venture capital firm Struck Crypto, said that the merger and future upgrades also affect the investment appeal of the so-called ethereum killers like Solana and Polkadot.

Institutional investors aren't jumping in just yet, as a fearsome macro environment chills the waters of risk appetite.

The switch to PoS is expected to reduce the rate at which ether tokens are issued, possibly by up to 90%, which should drive up prices.

An annual yield of 4.1% for ether token to validate transactions could prove tempting for investors.

While the proof-of- stake method allows for lucrative yields, many crypto purists point out that it moves Ethereum away from a purely decentralized model as the biggest validators could exercise greater influence over the blockchain.

The world ofEthereum might be advised to enjoy the Merge moment for the time being.

There may be a lot of volatility in the days to come, according to analysts at Kaiko Research. The community can take a well-earned victory lap.