Ethereum Merge May Spur More Institutional Interest

Ethereum will likely transition from PoW to PoS this week — DAS panelists discuss its implications post Merge


Source: DALL·E


key takeaways

  • Despite macroeconomic conditions, traditional institutions are not abandoning Ethereum
  • Less energy consumption will likely get institutions excited about Ethereum

The Ethereum Merge is only days away from moving from proof-of-work (PoW) to proof-of-stake (PoS) which will have drastic implications for the future of the blockchain.

Ethereum has evolved to become a technology that developers want to build on, Brian Mosoff, CEO of Ether Capital, said at Digital Asset Summit 2022.

“There’s going to be a spectrum of activities,” Mosoff said. “There’s going to be crypto-native activities such as DeFi, NFTs and metaverse, and then you’re going to have traditional finance — and the next five years are exciting because you’re going to see those worlds converge instead of acting in isolation from one another.”

Even in its current state, as a PoW blockchain, Ethereum has an array of layer-2s that are building products on top of the blockchain, said Kain Warwick, founder of Synthetix, a derivatives liquidity protocol.

“Ethereum has shifted from a monolithic computational layer to a settlement layer,” Warwick said. “The shift to proof-of-stake is going to make that much more efficient.”

Players in traditional finance will be expected to take a greater interest in Ethereum post-Merge. Mosoff said that will likely be driven by the fact that Ethereum will consume much less energy post-Merge. 

“A lot of funds and institutional money has an ESG [environmental, social and governance] angle,” Mosoff said at the conference. “As Ethereum becomes 99% more energy efficient…and there are ways custody has evolved and staking products will be appropriate for those institutions…you’re going to see a lot of institutions get excited about Ethereum specifically.”

Introducing a risk-free rate post-Merge will also appeal to institutions, said Anthony DeMartino, the US CEO of Matrixport.

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