The merge is finally here, but there are concerns about what will happen to ETH

The merge is finally here, but there are concerns about what will happen to ETH

It was confirmed that the Ethereum Consensus LayerEthereum Consensus Layer will be launched as soon as August 2022.

The Merge is finally here after years of delays. There is concern over what will happen to the price of Ethereum ETH once proof-of-work is turned off.

There are concerns that this $26 billion worth of ETH will flood the market after the merger, which is currently over 13 million ETH is staked in ETH 2.0.

A member of the DeFi Omega Korpi broke down the potential impact of The Merge and the unlocking of millions of ETH.

Korpi pointed out that the Merge won't allow withdrawals, as it is planned for another upgrade to the Ethereum platform to occur after about six months to one year. Korpi explained further that

A validator must exit the active validator set to withdraw ETH, but there is a limit to how many validators can exit per epoch. There are currently 395 k validators active pending If no new ones are set up highly unlikely it will take 424 days for all of them to exit. Korpi elaborated that even with withdrawals enabled:

Most users who have staked ETH with validators are most likely to be ETH-maximalists and are not interested in selling at current prices, according to Korpi's last point regarding The Merge.

There are ways for ETH stakers to access the staked token from their staked token. For investors who are not running their validator nodes, it is common to receive token such as bETH in exchange for staking ETH with a validator.

There is a chance that these bETH tokens are traded on the open market. In most cases, investors who are not already a part of the validator infrastructure don't need The Merge to access their liquidity.

If investors want to cash out of their stake, they can sell their bETH token. The platform curated ETH staking by Korpi into the table below, which makes up just 35% of all ETH staked.

The worry about a vast unlocking of capital after The Merge may be misplaced. People who want to trade ETH can already do so via liquidity products, and those who are running their validators are unlikely to sell on launch.

The investor who has set up a node and has 32 ETH staked in the past few years is invested in Ethereum's future. It doesn't make sense to stake ETH and then sell and decommission a validator node as soon as it becomes a viable part of the ecosystem. As many in the space have commented,

The merge may not be priced in due to skepticism. The rule is to sell the news, buy the rumor or buy the news. The investors who are not staking their ETH could be waiting for confirmation that The Merge will be successful.