Blockchain

A Look At Ethereum Merge Misconceptions and Opportunities

Including changes in gas prices, asset duplication, and more.

Blockchain

A Look At Ethereum Merge Misconceptions and Opportunities

Including changes in gas prices, asset duplication, and more.

Ethereum’s The Merge is just around the corner, where the blockchain will effectively shift from a proof-of-work (PoW) consensus to proof-of-stake (PoS).

Simply put, it will become more energy efficient by removing the need for mining. By moving to PoS the network will become more easily scalable, secure, and sustainable.

While it is great news for the network, there have been several misconceptions about what it could mean for the community — something Ethereum recently addressed.

By far the largest misconception is that gas fees (network transaction fees) will become significantly lower. “The Merge is a change of consensus mechanism, not an expansion of network capacity, and will not result in lower gas fees,” stated Ethereum on its site. However, it also shared that lowering gas fees and increasing capacity is something that is being worked on and that The Merge is a necessary precursor to that goal.

Other misconceptions included the opinion that transactions will be faster, withdrawals of staked ETH will be available, and concerns that stakers will all exit at once.

The network shared that transaction speed will most likely not see any change and that withdrawals will not be available until the “Shanghai Upgrade” is complete. Once withdrawals of staked ETH are available, there is a security mechanism that will limit the amount available to be withdrawn.

While most are excited about the network’s move to PoS, there is a likelihood miners will do what they can to extract the last bit of value out of the PoW chain, effectively creating a hardfork. With this users have begun to share thoughts on high risk opportunities to take advantage of the short window of time that both chains will exist.

Of the strategies shared, the easiest to understand and execute is simply to HODL PoW ETH on chain and wait for what is effectively an “airdrop,” much like the situation with Bitcoin Cash and Bitcoin Gold in 2017.

Other more complex and riskier strategies include having long positions in ETH but shorting ETH futures. Another opportunity shared by Olimpio is the fact that there will be a window in time in which on-chain assets like NFTs duplicate.

In this scenario the opportunities are highly speculative and also risky due to the fact that they may open users up to vulnerabilities of a “replay attack” — in which the sale of your asset on the PoW chain is replicated by an exploiter on the PoS chain due to matching wallet IDs and they snag your asset.

For those looking to take the safe route and are simply holding ETH, nothing is required to be done. Things will continue on as they have, “as a user or holder of ETH or any other digital asset on Ethereum, as well as non-node-operating stakers, you do not need to do anything with your funds or wallet before The Merge,” shared Ethereum on its website.

In other news, Houston Texans Become First NFL Team to Sell Game Suites Through Crypto.

You may also like

Ethereum Developers Run the Network's First-Ever ‘Shadow Fork’
Blockchain

Ethereum Developers Run the Network's First-Ever ‘Shadow Fork’

A significant step in its shift to a Proof-of-Stake protocol.
Ethereum Puts a $1M USD Bounty Up for Grabs
Cryptocurrency

Ethereum Puts a $1M USD Bounty Up for Grabs

For developers who can find critical bugs in the network before The Merge.
Ethereum’s Highly Anticipated Merge Goes Live on Ropsten Testnet
Blockchain

Ethereum’s Highly Anticipated Merge Goes Live on Ropsten Testnet

A crucial step in the networks transition from Proof-of-Work to Proof-of-Stake.
Despite ETH Merge Enthusiasm, One Exchange Launches "Potential" Hard Fork Token
Blockchain

Despite ETH Merge Enthusiasm, One Exchange Launches "Potential" Hard Fork Token

TRON Founder H.E. Justin Sun has launched two new tokens on his exchange, ETHS and ETHW.
More ▾