Synopsis
- Ethereum Merge from Proof of Work to Proof of Stake is the most awaited event of the year,
- ‘stETH’ a derivative of Ethereum has slumped its price indicating a potential obstacle in the Merge.
- ETH’s value had skyrocketed last weekend with Merge ahead of it.
The price impact on ETH
The Merge is an anticipated event for many ETH supporters as the new upgrade claims to offer better features and most importantly better scalability for dApps. The price of Ethereum has risen over the weekend by 1.3%. While the native token has been showing some signs of highs, the derivative token of Ethereum ‘stETH’ has slumped which may be a sign of hiccups that could occur during the merge.
According to Enigma – an institutional digital assets advisory and brokerage firm, the price drop of ‘stETH’ – a type of staked Ethereum could mean a 6.25%-6.5% probability of the Merge happening with major technical bugs and delayed launch.
Amidst the Merge hype, Lido Finance announces stETH on Layer 2 in a tweet
For more information on Lido’s plans for coming to L2, check out our recent article: https://t.co/H6ccY7iBrC 🏝️
— Lido (@LidoFinance) August 16, 2022
Additional Read: Ethereum Merge Update
Enigma’s take on ‘stETH’
Enigma treats ‘stETH’ as an Ethereum bond that can offer a 4% annual return to investors. According to some analysis, if the Merge is successful ‘stETH’ holders may receive 1.04 ETH a year. At the time of writing, the value of ‘stETH’ was 0.973 ETH which brings Enigma to a consensus that the price may imply a 93.5%-93.75% chance of the Merge completing smoothly and on schedule. The estimate of a successful and impactful merge completion is tad less compared to the market watchers as most developments of the upcoming Merge have been successful and at times even before schedule.
“The market has high confidence in the Merge,” John Freyermuth, an analyst at Enigma Securities told CoinDesk.
More on Ethereum Merge
The Merge of the Ethereum blockchain with the Beacon chain means a fundamental alteration of the blockchain itself. Post the Merge, Mining on Ethereum may diminish making the blockchain more sustainable. The Merge is scheduled to go live in September if all the developments go well.
“I am completely confident that it will go well,” Ben Edgington, global product lead for institutional Ethereum staking service Teku, ConsenSys told CoinDesk in a press statement. Every testnet Merge has been successfully completed according to Ben.
The news of Ethereum Merge has helped the native token to surge from $ 1,000 to $ 2,000 in the last month.
Additional Read: Ethereum Developer Address Potential Glitch!
Writing Off ETHPOW
The discount on the Ethereum derivative ‘stETH’ has come to 3% from 7% as an impact of the Merge. The same staked ether was grappling due to the token liquidity crisis which led to the downfall of the Celcius network and Three Arrows Capital.
The current stETH price shows “incredibly low-risk premia that’s packed with the Merge execution risk, smart contract risks and any systemic risk,” Enigma’s Freyermuth said.
What is Crypto derivative (stETH)?
Staked ether (stETH) is a crypto token of ether (ETH) that has been “staked” or ‘’deposited’’ and locked to support the upgrade of Ethereum’s network called the Beacon chain.
Source: CoinDesk
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