Behind ETH Merge: Potential Coins Pretty Worth Following!

2022/08/31 10:29:19

The cryptocurrency market is well known for reacting to news about leading projects. In this article, we will look into several tokens worth keeping tabs on after Ethereum completes the Merge, the network’s most significant update to date.

About the Ethereum Ecosystem and Its Merge

Ethereum is a decentralized blockchain platform that supports the second-largest cryptocurrency by market capitalization, ETH. The network became the first blockchain to support smart contract functionality after launching in July 2015. At the moment, Ethereum runs on a Proof-of-Work (PoW) consensus mechanism.

As a result of getting a first-mover advantage regarding smart contracts, Ethereum currently hosts the majority of decentralized applications (dApps), Decentralized Autonomous Organizations (DAOs), and Non-Fungible Tokens (NFTs).

Despite its massive success, Ethereum remains unscalable and unsustainable due to using a PoW consensus model. To address these challenges, Ethereum began transitioning to a Proof-of-Stake (PoS) model in December 2020, hoping to address the blockchain trilemma (scalability, decentralization, and security).

As aforementioned, the Merge is the most vital upgrade in the Ethereum network. This upgrade will mark Ethereum’s transition to a PoS network after the mainnet (current execution layer) merges with the Beacon Chain, Ethereum’s PoS consensus layer.

Ethereum developers project that the Merge will cut the network’s energy consumption by 99.95%. Additionally, they claim the Merge will set up the network for sharding, an improvement that might see Ethereum process up to 100,000 transactions per second. Developers expect the Merge to ship between Q3 and Q4 2022, with a soft deadline of September 19.

The Impact of ETH Merge

After the Merge, Ethereum might introduce triple halving. Specifically, the triple halving will reduce ETH’s supply by approximately 80% - 90%, which is almost equal to halving the Bitcoin system three times. By transitioning to a PoS model, most ETH will go to staking, effectively minimizing the amount of ETH in the market.

In addition, the merger also has implications for Ethereum Classic as well as other projects in the ETH ecosystem. Here are some of the notable tokens associated with the ETH Merge.

Notice: KuCoin does not provide financial advice. Please do your own risk assessment when deciding how to invest in cryptocurrency and blockchain technology.

Popular Tokens Associated with the Ethereum Merge

Ethereum Classic (ETC)

Ethereum Classic (ETC) is the continuation of the original Ethereum blockchain. ETC came to be after Ethereum had a hard fork following a $60 million attack. As we know, ETH continued on a new version of the blockchain (one that did not recognize the attack), while ETC continued running on the original network.

With the Merge inching closer, ETC’s price will likely experience massive changes. The first possible outcome is that the holders sell their holdings to purchase ETH and participate in ETH 2.0 as stakers.

Conversely, if ETH miners switch to mining ETC - which runs on a PoW model - instead of becoming stakers in ETH 2.0, which will empower the development of the ETC ecosystem.

Layer 2: Polygon (MATIC) & Optimism (OP)

Polygon is an Ethereum Layer-2 (L2) sidechain scaling solution. With Ethereum transitioning into a PoS network, MATIC, Polygon’s native token, might surge. This is because Ethereum will still need Polygon after the Merge. After all, the upgrade on its own will not make Ethereum scalable.

With Ethereum running on a PoS model post-Merge, Polygon’s scaling solutions will become more eco-friendly, making the network more appealing to institutional investors and environmentalists. At the time of writing, MATIC is trading at $0.8296.

Optimism (OP) is an Ethereum L2 roll-up solution that verifies ETH transactions off-chain to boost the network’s scalability. Like MATIC, OP will likely benefit from the Merge, seeing as Optimism will continue to prove vital to the Ethereum ecosystem even after the upgrade.

DeFi: UNI, COMP, AAVE

The Merge might have a potentially tremendous effect on tokens of DeFi protocols like Uniswap(UNI), Compound (COMP), and Aave (AAVE). The prospect of the Merge helping Ethereum address its sustainability issues will likely attract more institutional investors into the DeFi space, consequently pushing the prices of related tokens up.

Metaverse: hiBAYC, hiPUNKS, APE, MANA

With the arrival of ETH merge, applications in the Ethereum ecosystem, such as NFTs, GameFi, Metaverse and X2Earn, will become even more widespread. These tokens associated with them will also have some impact.

hiBAYC is an ERC-20 token representing 0.000001 ownership of a target Bored Ape Yacht Club (BAYC) NFT in the BAYC Meta-Swap of Fracton protocol. hiPUNKS is similar to hiBAYC, only that it represents 0.000001 ownership of a target CryptoPunk NFT within the Fracton protocol.

ApeCoin (APE) is an ERC-20 governance and utility token for the Ape ecosystem, which includes communities for projects like BAYC, Mutant Ape Yacht Club (MAYC), Bored Ape Kennel Club (BAKC), and Otherside. With APE at the center of an ecosystem that aims to make NFTs and the metaverse greener, the coin might surge astronomically.

Decentraland (MANA) is a metaverse game based on Ethereum. The Merge is set to have a massive impact on the platform’s native token, MANA, as metaverse continues gaining popularity.

Ethereum Name Service (ENS)

Ethereum Name Service (ENS) is the Web3 version of the Domain Name System (DNS), and it allows ETH users to customize their addresses to contain a “.eth” extension, which is human-readable. For instance, instead of having an ETH address that starts with 0x, a user named John can purchase an ENS address and customize their address name to John.eth.

At the moment, there are more than 1.8 million ENS names. The number of ENS names is set to increase after the Merge because it will significantly cut Ethereum’s energy consumption, attracting more users.

Closing Thoughts

The Merge will have a massive impact on crypto tokens within the Ethereum ecosystem and the broader crypto market. Thus far, the optimism about the Merge nearing its shipping date has seen most Ethereum-associated tokens record notable gains over the past 30 days.