Ethereum The developers announced that they will release the Ethereum Merge update called The Merge on the mainnet on September 19, in a post they published last Friday. After this important news, Ethereum reacted positively by performing a strong rally.
Although the date of the highly anticipated update has been announced for a while, it has created an expected excitement in the community, but investors may not know or misunderstand some information about this update. Lark Davis, one of the popular analysts, said that investors The Merge He revealed five items he thought were wrong about the update.
1. Merge Will Reduce Fees
Lark Davis stated that the belief that high gas fees on Ethereum will decrease after The Merge is one of the biggest myths. While the ETH gas fee has been on a downward trend lately, this is due to nothing more than a drop in network activity in 2022 this year. However, Davis believes we are only one NFT pump away from clogging the Ethereum network, thus increasing gas fees even further.
Therefore, major relief is unlikely until new scale networks such as Sharding, which are directly embedded in the mainnet, are active, and this update will likely be completed in 2023.
2. Staked ETHs Will Overflow
Some of the investors believe that after The Merge upgrade, the market will be flooded with staked Ethereum. However, investors forget that they cannot withdraw the staked Ethereum for 6-12 months after the Merge upgrade. Also, not all staked Ethereum will be unlocked at the same time. A maximum of 40,000 ETH per day will be unlocked from the 13 million ETH supply. Otherwise, it can be predicted that it will be a big problem.
3. The Merge Won’t Change Ethereum’s Economy
Many investors believe that The Merge upgrade will not change the economy of Ethereum, which is wrong. According to Lark Davis, the new update is “in fact, the most important economic event that has ever happened to the network,” commented, despite its currently very bad economic structure. Davis says this is because Merge comes with triple halving.
This will reduce newly minted Ethereum emissions by 10 times the current inflation rate. Thus, the daily selling pressure for Ethereum will also decrease by a factor of 10.
4. Stake Rewards Will Drop After The Merge
This misconception is another article accepted by the community. According to Davis, staking rewards can increase by 50% on average after the update. According to some estimates, it will be possible to earn 10% APY by staking Ethereum. This is because all transaction fees will shift from miners to stakers after the PoS transition.
5. The Ethereum Network Will Be Less Secure
There is a long-standing debate among supporters of PoW and PoS about which is more secure. Davis thinks it would cost much more to try to crash the network under the Proof-of-Stake system. This is because in PoS, it has to buy tens of billions of dollars worth of coins to get the majority of the bet and attack the network. Even if the attack is successful, the attackers will lose big money. Davis believes Ethereum will be more secure under a PoS network (proof of stake).
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, KoinFinans and the author of this content cannot be held responsible for personal investment decisions.