1. Home
  2. merge

merge

ETH hits 7-month high ahead of Shanghai and Capella upgrades

Ether has broken the $1,900 resistance level for the first time in months and is currently sitting above $1,911.

Ether (ETH) has breached $1,900 for the first time in over seven months, a week before staking withdrawals are enabled in the next major update for the second-largest cryptocurrency by market capitalization.

CoinMarketCap data shows the last time Ether was over $1,900 was on Aug. 16, 2022, amid a broader crypto sell-off at a time when the United States Federal Reserve was hiking the Federal Funds rate at a record pace to combat inflation.

The Ethereum Shanghai hard fork, set to occur on April 12, will implement EIP-4895 — allowing validators and stakers to withdraw staked ETH from the beacon chain — in addition to other EIPs which aim to help increase transaction speeds while reducing transaction costs.

The recent price increase could be driven by expectations that the Fed may ease up on its quantitative tightening efforts as rate increases cause cracks in the global banking industry, or by increased demand for Ether given that staking is slated to be more flexible.

While Bitcoin (BTC) has also recorded gains in recent days, ETH/BTC — a trading pair comparing the price of ETH to BTC — has increased by nearly 3% in the last week according to TradingView, suggesting both factors may be contributing to Ether’s price jump.

While Shanghai refers to the fork on the execution layer client side, Capella is the upgrade name on the consensus layer client side and is set to be executed shortly after Shanghai on April 12.

The execution layer is where all the smart contracts and protocol rules are, while the consensus layer ensures that all network validators follow these rules.

Related: 3 reasons why Ethereum price can reach $3K in Q2

It is worth noting that the price of ETH dropped sharply following the execution of The Merge on Sept. 15, 2022, where it lost just under a quarter of its value in one week according to CoinMarketCap.

ETH price action since August 2022. Source: CoinMarketCap

Despite some analysts and traders suggesting the unlocking of staked Ether will create sell pressure, what will occur following the Shanghai and Capella updates is currently speculation.

Hodler’s Digest: FTX EU opens withdrawal, Elon Musk calls for AI halt, and Binance news

Former FTX Boss Sam Bankman-Fried Sentenced to 25 Years in Prison

Ethereum’s Transition to Proof-of-Stake Yields Deflationary Results

Ethereum’s Transition to Proof-of-Stake Yields Deflationary ResultsAfter the transition from proof-of-work (PoW) to proof-of-stake (PoS), Ethereum’s annual issuance rate has been reduced to negative 0.057%, according to statistics 158 days after The Merge. The metrics indicate that more ethereum tokens have been removed than issued, and if the chain were still under PoW consensus, 1,823,678 ether would have been minted to […]

Former FTX Boss Sam Bankman-Fried Sentenced to 25 Years in Prison

ConsenSys founder ‘bullish’ on Ethereum following crypto winter performance

Ethereum co-founder and ConsenSys founder Joe Lubin says ETH’s relatively stable value through crypto winter is reason to be bullish about Ethereum’s future.

With Ethereum showing resilience through the latest cryptocurrency winter, ConsenSys founder Joe Lubin says he’s ‘bullish’ over Ether's (ETH) relative stability through compounding macro events. 

Cointelegraph Magazine editor Andrew Fenton spoke to Lubin at the Web3 event Building Blocks 23 in Tel Aviv, Israel, for an all-encompassing interview around the current state and future of the Ethereum ecosystem landscape.

The co-founder of the preeminent smart contract blockchain protocol touched on a number of subjects, including ETH’s market performance over the past year. A myriad of macro events, including the collapse of algorithmic stablecoin Terra/LUNA and the demise of cryptocurrency exchange FTX, played their role in what Lubin described as a blow off top for the ecosystem:

“We do this thing as you know, where we get irrationally exuberant, and then there's a blow off top, higher highs, lower lows.”

Lubin likened the past 12 months to the early 2000s, where the dot-com boom and bust saw 'crazy ideas' explored driven by 'exuberance' for geopolitical, economic and ecosystem reasons. He believes the same type of exuberance may not drive investors in the crypto space in the near future but sees potential for more great projects and 'tremendous innovation':

“I think we're in a phase where we have built enough enabling infrastructure. We built scalability, usability, and now we can build more useful use cases.”

Despite a tough year for the cryptocurrency markets, Lubin takes positives out of the resilience of the Ethereum ecosystem and the value being realized by ‘high profile companies’ exploring what can be built within nonfungible token (NFT) space in particular.

Related: What's in and what's out for Ethereum’s Shanghai upgrade

The ConsenSys founder added that ETH’s ability to hold its value around $1200 for an extended period while certain ‘CeFi’ players imploded was reason to be positive for the future of the ecosystem:

“It feels like there just weren't people who would sell the token at lower prices. And that's a good thing. I'm bullish from here.”

The Ethereum Merge also played an important role in the market value of ETH in recent months. Part of Ethereum’s move to proof-of-stake consensus was the introduction of its fee-burning mechanism, which saw Ethereum become deflationary for the first time in November 2022.

Lubin also touched on this subject, highlighting his belief that making ether deflationary was important to ensure the underlying asset increases in value over time:

“There's money that you spend to buy a coffee. There's money that you invest. There's money you can lend and borrow. You want sort of your high economic bandwidth money, like ether, to be very fresh and to appreciate in value.”

The Ethereum co-founder also said he was confident that the Ethereum ecosystem would not see any further changes in its monetary supply and that a continual contraction of the monetary base was likely to continue.

“I think a slow contraction is reasonable, or at least if you smooth that we'll certainly have ether locked in the protocol and we'll have ether locked in other kinds of DAO voting systems, DeFi, etcetera. I do think that's valuable for the ecosystem.”

Ethereum is now gearing up for the upcoming Shanghai hard fork, of which an important feature will be the enabling of staked ETH in the Beacon Chain and rewards to be withdrawn by users. Ethereum foundation developers have been aiming for March 2023 as a tentative deploy date.

Former FTX Boss Sam Bankman-Fried Sentenced to 25 Years in Prison

Metamask Launches Ethereum Staking Services via Lido and Rocketpool

Metamask Launches Ethereum Staking Services via Lido and RocketpoolOn Friday, the Web3 wallet firm Metamask, a subsidiary of the Ethereum-centric company Consensys, announced the beta launch of ethereum staking features will be made available via Lido’s or Rocketpool’s liquid staking services. Users who want to stake ethereum and earn staking rewards can select one of the staking providers within the Metamask Web3 wallet’s […]

Former FTX Boss Sam Bankman-Fried Sentenced to 25 Years in Prison

Paxful to Drop Ethereum Trading Due to Increased Centralization and Consensus Mechanism Pivot

Paxful to Drop Ethereum Trading Due to Increased Centralization and Consensus Mechanism PivotPaxful, a New York-based, peer-to-peer (P2P) cryptocurrency exchange, will drop Ethereum trading from its platform on Dec. 22. Ray Youssef, CEO of the company, cited different reasons for this decision, with increased centralization and the recent consensus mechanism pivot amongst them. Youssef also stated that tokens built on top of Ethereum have been primarily scams. […]

Former FTX Boss Sam Bankman-Fried Sentenced to 25 Years in Prison

Ethereum’s Shanghai Hard Fork Could Happen in March 2023, ETH Dev Says Staking Withdrawals Is the ‘Highest Priority’

Ethereum’s Shanghai Hard Fork Could Happen in March 2023, ETH Dev Says Staking Withdrawals Is the ‘Highest Priority’According to a recent Ethereum Core development meeting on Dec. 8, developers disclosed that the next Ethereum hard fork, called Shanghai, could be implemented by March 2023. It’s been suggested that the Shanghai hard fork will be able to manage the network’s staked ethereum withdrawals. Ethereum Devs Aim for Hard Fork Target ‘Around March-ish’ On […]

Former FTX Boss Sam Bankman-Fried Sentenced to 25 Years in Prison

Demand for liquid Ethereum staking options continues to grow post-Merge

Demand for liquid Ethereum staking options gains pace in the months following the Merge, according to blockchain data.

Blockchain data analytics carried out by Nansen highlights the ever-growing amount of Ether (ETH) being staked across various staking solutions in the months following Ethereum’s shift to proof-of-stake (PoS) consensus.

The highly anticipated Merge has been a boon for decentralized finance (DeFi) in general, and staking solutions have been in high demand since Ethereum’s shift to PoS. This is according to blockchain data from a variety of staking solutions across the Ethereum ecosystem.

Nansen’s report highlights the impact of the Merge in introducing staked ETH as an out-and-out cryptocurrency-native yield-bearing instrument that has quickly outstripped other collateralized yield-bearing services.

The likes of Uniswap and other automated-market makers and liquidity providers remain popular but pale in comparison to the total value locked in staked ETH solutions. Over 15.4 million ETH is locked in Ethereum’s staking contract, which values the total staked ETH in the top six cryptocurrencies by market capitalization alone:

“Staked ETH is thus the first yield-bearing instrument to reach significant scale in DeFi, and has the potential to both significantly grow and radically transform the ecosystem in the coming years.”

Nansen provides some interesting insights from liquid-staked derivatives data. When Ethereum shifted to PoS, miners were replaced by validators who had to deposit or stake 32 ETH in order to propose new blocks and earn protocol rewards. Users that are unable or unwilling to stake 32 ETH can participate in pooled staking, also known as liquid staking. This also allows users to withdraw staked ETH at any time.

Nansen’s metrics reveal that liquid staking holdings are weighted toward long-term holders, while recently launched protocols are attracting new deposits faster than established services. 5.7 million of the total 14.5 million ETH is staked in staking pools like Lido and Rocket Pool, accounting for over 40% of the total staked ETH in the ecosystem.

Lido’s stETH dominates the space with a 79% share of the total market supply of staked ETH. 52% of the stETH tokens are found in Aave, Curve and Lido’s wrapped stETH contract indicating interest and utility for investors and DeFi applications. stETH has also seen a 127% increase in average daily trading volume since the Ethereum Merge.

Related: 64% of staked ETH controlled by 5 entities — Nansen

Meanwhile, Coinbase’s Ethereum staking pool cbETH has surpassed all other assets besides stETH in supply. Both Rocket Pool’s rETH and Coinbase’s cbETH have seen the most growth over the past three months, at 52.5% and 43.3%, respectively.

The growth of Coinbase’s ETH staking option also suggests that everyday users still trust centralized entities and are content earning yield from staked ETH as opposed to more complex, on-chain, yield-bearing strategies.

Former FTX Boss Sam Bankman-Fried Sentenced to 25 Years in Prison

Scam Artists Used Ethereum 2.0 Merge To Steal $1,200,000 in Crypto, According to Chainalysis

Scam Artists Used Ethereum 2.0 Merge To Steal ,200,000 in Crypto, According to Chainalysis

Blockchain analysis firm Chainalysis says scam artists stole $1.2 million worth of Ethereum (ETH) during the project’s merge to proof-of-stake. The firm notes in a new blog post that merge-related scams took in the haul shortly before, during and after the September 15th event. The merge scams resembled other classic frauds, explains Chainalysis. “Most Merge […]

The post Scam Artists Used Ethereum 2.0 Merge To Steal $1,200,000 in Crypto, According to Chainalysis appeared first on The Daily Hodl.

Former FTX Boss Sam Bankman-Fried Sentenced to 25 Years in Prison

Arbitrum transaction activity rockets 550% since August: Delphi Digital

Following the Nitro upgrade, activity on Arbitrum has surged and has nearly two-thirds of the transaction activity seen on the Ethereum base layer.

Ethereum layer-2 scaling solution Arbitrum has seen a massive surge in activity since its Nitro update in August, having just clocked around 62% as many transactions as the Ethereum base layer.

In a Nov. 1 report, crypto research firm Delphi Digital noted that as of the week ended Oct. 24, Arbitrum’s number of total transactions has increased by 550% since August, citing data from Dune Analytics.

In an earlier Tweet, Delphi Digital initially phrased Arbitrum as accounting for 62% of all transactions on Ethereum, which they later clarified was "incorrect phrasing". 

Arbitrum is an optimistic roll-up built by blockchain development firm Offchain Labs, aimed at scaling Ethereum smart contracts. It uses Optimistic Rollup technology to bundle large batches of transactions off-chain from Ethereum smart contracts and decentralized applications before submitting them to Ethereum.

A number of well-known protocols use Arbitrum, such as decentralized exchanges SushiSwap, Uniswap and GMX, lending protocol Aave and liquidity transport protocol Stargate. According to L2Beat, at the time of writing it has a current total-value-locked (TVL) of $2.59 billion.

Delphi analysts noted that weekly active users had spiked on Arbitrum, having grown 125% since Oct. 10 to reach a new high of 282,000 in the week ending Oct. 24.

The analysts also suggest that much of the surge in activity is likely driven by speculators trying to boost their on-chain activity in the hope of receiving a larger airdrop for a native token which has been hinted at by Offchain Labs co-founder Steven Goldfeder.

On Aug. 31 the Arbitrum One mainnet upgraded to Nitro, which Offchain Labs claimed in an Apr. 7 post would result in reduced transaction costs while increasing network capacity, adding:

“While Arbitrum today is already 90–95% cheaper than Ethereum on average, Nitro cuts our costs even further.”

Related: White hat finds huge vulnerability in Ethereum–Arbitrum bridge: Wen max bounty?

The low fees have resulted in various players from within the crypto ecosystem wanting to integrate with Arbitrum One, and on Nov. 1 decentralized finance (DeFi) optimization tool Furocombo, capital raising protocol Aelin, and insurance protocol Y2K Finance each announced they were live on the popular scaling solution.

On Oct. 13 Offchain Labs announced they had acquired one of the core development teams behind the Ethereum Merge, Prysmatic Labs, which it hopes will enable greater communication and collaboration between developments on both layers.

Former FTX Boss Sam Bankman-Fried Sentenced to 25 Years in Prison

Ethereum’s Merge won’t stop its price from sinking

Ethereum became deflationary after its September Merge. But for now, it's not going to make much of a difference.

Ethereum’s long-awaited Merge took place in September, shifting it from a legacy proof-of-work (POW) model to the sustainable proof-of-stake (PoS) consensus algorithm. Many observers expected Ether’s (ETH) price to respond positively as its daily emissions declined 90% with the halt of mining operations. 

However, the expected price surge never occurred. In fact, Ether has been down by over 7% since the upgrade. So why didn’t the Merge drive up the coin’s price?

Post-merge ETH monetary policy

Ethereum’s monetary policy was simply to reduce the token’s supply to 1,600 ETH per day. The PoW model, an equivalent of 13,000 ETH were emitted daily as mining rewards. However, this has been wholly eliminated post-Merge, as mining operations are no longer valid on the PoS model. Therefore, only the 1,600 ETH supply remains for staking rewards, cutting its daily supply by 90%. If the average gas price on the Ethereum network becomes at least 16 gwei, the 1,600 ETH would be burned every day, making Ethereum’s inflation zero or even triggering a deflation.

Related: Tax on income you never earned? It’s possible after Ethereum’s Merge

This monetary policy was a key driver for Ether’s price hike expectations. However, users didn’t consider the impact of marketing sentiment and regulatory changes. The deflationary model was established to impact ETH’s price long-term when the blockchain’s supply growth is in the negative zone.

The token supply growth since the Merge has been -0.01%, which means roughly the same amount of ETH was produced as the amount burned through transaction fees. Although this metric indicates deflation, it’s not substantial for increasing the token’s price — especially when liquidation remains high across the crypto marketplace.

The state of ETH deflation

Presently, ETH is deflating. The number of outstanding tokens fell by more than 10,000 over the last two weeks, while a total of 3,037 new tokens have entered the market since the Merge. New token supply increased until Oct. 8, as Ethereum remained in inflation. Since then, more tokens have been burned through transaction fees, making ETH deflationary.

More than 49,000 ETH has been burnt in the last 30 days, at an average rate of 1.15 tokens per minute. It seems that Ether’s supply has reached its peak, and the supply growth will continue to decrease significantly. So, what happened on Oct. 8 that triggered this deflation for the first time?

Related: Federal regulators are preparing to pass judgment on Ethereum

It was mostly due to a new blockchain project called XEN Crypto. Since its launch, XEN Crypto has burned over 5,391 ETH in transaction fees, making it second on the ETH Burned leaderboard, marginally behind Uniswap V3. The rate of transactions and ERC-20 token minting was significant between Oct. 8 and Oct. 15. The average gas price that week was 37 gwei, more than double the “ultrasound barrier” of 15 gwei, which triggered this deflation.

For now, as long as Ethereum’s gas price remains above 15 gwei, the network will burn enough tokens to keep it deflationary.

Why isn’t Ether’s price rising?

Although the mechanism introduced by the Merge and the current state of deflation is technically supposed to drive prices upward, the timing is simply not suitable. The prices of any cryptocurrency are not just based on its supply and burn mechanism — liquidation also plays a significant role.

The U.S. Federal Reserve has been aggressively increasing interest rates for the past few months. As a result, government treasury bonds have been producing significant yields, and these bonds have much fewer risks than crypto. There’s also more regulatory pressure on the crypto space, and with the recession running wild, short-term investors are stepping away from volatile assets.

Related: Post-Merge ETH has become obsolete

Coinglass data shows that ETH liquidations have been especially high for the past two months. This is primarily the reason why ETH’s price has not increased, and instead declined despite its deflationary status.

Deflation: an impact in the long run

Overall, deflation will certainly show an impact in the long run. If a bullish cycle appears, it will lead to increased network usage, thus increasing gas prices. This will result in a more substantial decrease in the token’s supply, and a possible price surge might appear. Liquidation has been slowing down in the past few days, as ETH prices seem to have reached a sustainable resistance level. However, whether or not a bullish cycle appears soon will depend on the market sentiment.

Iakov Levin is the founder and CEO of Midas, a custodial crypto-investment platform for DeFi assets.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Former FTX Boss Sam Bankman-Fried Sentenced to 25 Years in Prison