Barely two weeks ago, the historic Merge upgrade which saw the Ethereum (ETH) network migrate to a proof-of-stake model, took place. However, despite all the hype and expectations that preceded the upgrade, it appears that not much can be made of the prospects of Ethereum so far. At least, not yet.
The transition to proof-of-stake means that the network now uses significantly less energy than it used to. It also reduces the risk of centralization and improves the overall security of the network. These new benefits that come by default after the Merge automatically open up big opportunities for the ecosystem.
Firstly, it is expected that Ethereum will save a whole lot of economic resources that it would otherwise have spent on proof-of-work. This means that Ethereum-based projects will now have more resources than they usually would expect to have before the merge.
Furthermore, more institutions and corporate bodies were expected to switch to the Ethereum network after the Merge. Per Ethereum, the proof-of-stake boasts of a near-zero carbon footprint. Although this may seem like a mere sentiment, many governments and corporations did not want to identify with the proof-of-work that was adversely affecting the environment. Therefore, it is only expected that those who were waiting on the sidelines will now be turning to the network for use. You can also read this Ethereum layer 2 scaling solutions that are designed to help fix some of Ethereum’s most glaring defects.
On paper, there are a lot of benefits attached to Ethereum's transition, but the reality being experienced is shockingly different. So far, Ethereum has struggled to live up to expectations and is currently failing to attract new users to its platform.
A strong indication of the above statement is shown by the market capitalization of the second-largest cryptocurrency. As of publication, the market cap sits at $165.51 billion, per CoinMarketCap data. That represents a 15.3% loss from its September 15 value (over $195 billion) when the Merge officially took place. Essentially, the asset has lost no less than $30 billion.
This is despite some members of the crypto community tipping Ethereum to surpass Bitcoin (BTC) in market capitalization.
On a broader scale, the huge capital outflow also affects Ethereum's price which currently hovers around the $1,300 mark. At press time, ETH was trading at $1,351, representing another 15% decline in the asset's price from what it was on September 15.
There's also a regulatory uncertainty surrounding the asset regarding whether or not it should be classified as a security. This follows after SEC Chair, Gary Gensler recently insisted that proof-of-stake assets tend to arouse the interests of investors with hopes of making an unimaginable profit. The commentary has made many believe that shortly, the SEC will come after the crypto asset.
On Ethereum's part, the team behind the blockchain continues to express its confidence in the long-term prospects of the upgrade. Ethereum claims that the Merge was only the first step in a series of about five. This was disclosed recently as the network unveiled its extensive roadmap.
According to Ethereum CEO Vitalik Buterin, one of the major aims of the network is to improve its scalability. And Buterin assures that, the Merge was a significant part of this ambition.
Meanwhile, Kosala Hemachandra, founder and CEO of the MyEtherWallet platform has also weighed in to support the takes of Buterin. Speaking to Coinspeaker, he said:
“Thanks to the merge, we can look forward to improved scalability which is one of the many things this more sustainable and secure ecosystem will bring.”
Without a doubt, Ethereum has so far, performed way below earlier projections. But despite this, investors continue to keep a keen eye on the price of the popular asset. The reason for that is that despite a prevalent market downturn, ETH price has managed to remain considerably steady.
