Because the Ethereum Merge draws near, most are speculating on its economic effects. To supply a clearer view to individuals who anticipate the main upgrade, Lex Sokolin, the mind economist at ConsenSys, shared his insights within an interview with Cointelegraph.
The expert discussed the result from the Merge on users, developers and companies. Furthermore, Sokolin also removed up some misconceptions concerning the Merge and described the way the new development can have an affect on the cost of Ether (ETH).
Around the user level, the economist stated the average user can make use of the chain because they normally do, only one significant impact for users publish-Merge is getting a less dangerous method to stake ETH. He described that:
“Right now, staking around the beacon chain carries the danger the Merge doesn’t happen. But when it will, participation in staking is much more accessible and it has less technical risk.”
When it comes to effects on companies and developers, the expert shared the Merge may standardize the notional rate of interest for the whole Web3 space with the ETH yield. This might potentially remove the requirement for speculative financial engineering projects, based on Sokolin.
“We expect that perils of projects and business possibilities could be evaluated against just staking ETH on the risk-adjusted basis.”
It can possibly modify the decentralized finance (DeFi) space considerably as products have to contend with the returns provided by the main protocol. “That should consequently mature the marketplace, and make chance costs for investors chasing yield in places with an excessive amount of risk,” he added.
When requested about people’s expectations and misconceptions concerning the Merge, the expert highlighted that it’ll not lower gas charges or solve for large throughput yet. However, the Merge sets the building blocks of these things later on. After this, Sokolin pointed out the Merge will remove among the less preferred narratives for Web3, the issue of ESG impact.
Related: Coinbase will ‘briefly pause’ ETH and ERC-20 token deposits and withdrawals during Ethereum Merge
With regards to the Merge’s effects around the cost of Ether, the economist believes that technical developments will in some way affect the need for ETH. Based on Sokolin, the crypto-economic changes inside the protocol naturally have implications around the supply and cost from the asset. “Though, the way the market winds up prices individuals in accordance with broader macroeconomic occasions continues to be not yet been seen,” he added.
