The Ethereum Foundation’s successful completion of the Merge early Thursday is likely to lead to strong institutional adoption of the blockchain's token, ether (ETH), Bernstein said in a research report.
The blockchain will “emerge as a digital asset category leader, given its economic transition, scalability roadmap, and [the] vibrant digital economy being built on it,” Bernstein said. It also expects strong institutional adoption of ether, due to its leading market share, market capitalization, and liquidity.
Block number #15537394 was the first to be validated under the proof-of-stake (POS) system, and about 45 ETH were paid in tips, the report said. The validator participation rate was around 95% and the “chain reached finality” within minutes of the transition, Bernstein said.
CoinDesk Special Coverage: The Ethereum Merge
Following the transition, graphics processing unit (GPU) mining networks are redundant and will likely be used on Ethereum forks, Ethereum Classic or the gaming industry, Bernstein said.
The successful Merge is the result of years of planning and is a major milestone in the Foundation’s roadmap for “developing Ethereum into the world’s largest decentralized super-computing network,” analysts Gautam Chhugani and Manas Agrawal wrote.
From an investment perspective, Ethereum’s token emissions will be reduced by around 90%, the network's energy use will be cut by about 99%, and holders of ETH can now earn a staking yield, the note said.
The new economic model following the Merge, combined with the token burn, may lead to “negative token emissions” during times of high demand. This sets a ceiling on total ether supply, and brings “digital scarcity,” the note added.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.