Ethereum inched one step closer to ‘The Merge’ when it successfully deployed upgrades to the second of three test networks. The second test, known as Sepolia, received a 94 percent acceptance rate. An acceptance rate of 66 percent is considered sufficient for passing. The only problem was a temporary software bug.
The first test on the Ropsten test network was completed in June, also with relatively minor bugs.
The next step is a test on the Goerli testnet. If the Goerli test is successful, the Merge will roll out later this year. Developers have not set a date for the Merge, although many in the industry expect it to occur in late summer or early fall. Developers began discussing the idea of the Merge in 2014.
The Merge is designed to move the blockchain away from its energy-intensive proof-of-work (PoW) consensus method for transaction approvals to a proof-of-stake (PoS) approach. The POS will make Ethereum about 99 percent greener.
The Merge will also significantly reduce the supply of Ether. It also will correct criticism of the platform, such as high transaction fees, low throughput, network congestion, and sluggish settlement times compared to newer blockchains. Ethereum founder Vitalik Buterin has said that a successful Merge is critical to Ethereum’s success.
How Will the Merge Affect the Price of Ether?
Upon announcement of the successful test, the price of Ether, Ethereum’s native cryptocurrency, rose by almost 4 percent from $1,139 to $1,181. The price continued to rise as the week progressed, climbing to 19 percent over the previous week. Bitcoin prices increased only 8 percent over the same timeframe.
Ether’s price, however, is still down about 65 percent this year. Because of recent Federal Reserve actions, the overall crypto market has experienced a liquidity crisis, and several companies have experienced significant challenges. Crypto market capitalization is only about half what it was at the beginning of the year.
The Ethereum blockchain has more developer apps than any other crypto company. It still handles most of the NFT trading and decentralized finance offerings, according to The Motley Fool’s Ascent. Ether is the second largest cryptocurrency by market capitalization, according to CoinMarket.
The number of Ether tokens is already decreasing. More than 2.5 million ETH have been burned since August 2021, reducing the supply by more than 50 percent.
Some believe that the Merge, coupled with the already dwindling supply of Ether, will result in continued higher Ether prices. However, the overall downturn in the crypto industry will likely mute the increases somewhat.
“When this merge finally happens, we’ll see some tangible energy from investors — but it’s probably going to be exponentially smaller than it would have been if the market was still roaring,” Michael Safai, a partner with the crypto trading firm Dexterity Capital, told Yahoo Finance.
Sources:
https://www.fool.com/the-ascent/cryptocurrency/articles/ethereum-merge-achieves-another-milestone-as-eth-price-climbs-19-for-the-week/
https://finance.yahoo.com/news/crypto-ethereum-closer-major-software-merge-115523001.html
