# Cryptoverse: After Merge, ether heads for a $20 billion Shanghai splurge Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-09-20 Category: TRADING Category URL: https://financedigest.com/category/trading Meta Title: Ethereum Upgrade: From PoW to PoS - What's Next? Meta Description: Learn about Ethereum's recent PoS upgrade, upcoming event, and future plans to scale and reduce energy usage in this insightful article. URL: https://financedigest.com/cryptoverse-after-merge-ether-heads-for-a-20-billion-shanghai-splurgehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-09-20t102106z2lynxmpei8j069rtroptp4fintech-crypto-biden-1736815191916-compressed.jpg) By Medha Singh and Lisa Pauline Mattackal (Reuters) – The Merge came, saw and conquered. Not that you’d guess from crypto prices. The Ethereum blockchain’s mega-upgrade [finally went live](https://www.financedigest.com/cost-of-living-in-focus-as-australias-election-race-hits-final-stretch.html "Cost of living in focus as Australia’s election race hits final stretch") on Sept. 15, moving it to a less energy-intensive “proof of stake” (PoS) system with hardly a hiccup. Even though anticipation of the event had seen ether rise about 85% from its June doldrums, it has since sunk 19%, [hit along with bitcoin and other risky assets by investor angst over inflation](https://www.financedigest.com/uk-shop-price-inflation-hits-record-8-in-january-brc-2.html "UK shop price inflation hits record 8% in January: BRC") and central-bank policy. Nonetheless, many [market players](https://www.financedigest.com/sports-and-athletic-insole-market-players-eye-custom-and-3-d-printed-products-for-performance-optimization-says-future-market-insights.html "Sports and Athletic Insole Market Players Eye Custom and 3-D Printed Products for Performance Optimization, Says Future Market Insights") are bullish about the long-term prospects of Ethereum and its native cryptocurrency. Previously, we have talked to sovereign [wealth funds](https://www.financedigest.com/norway-wealth-fund-employee-sues-for-workplace-gender-discrimination.html "Norway wealth fund employee sues for workplace gender discrimination") and central banks to help build their digital asset allocations… but direct [investment has been voted down due to energy concerns,” said Markus Thielen, chief investment officer at asset manager](https://www.financedigest.com/french-watchdog-fines-h2o-asset-management-executives-over-tennor-investments.html "French watchdog fines H2O Asset Management, executives over Tennor investments") IDEG Limited. “With Ethereum moving to PoS, this clearly solves this last pillar of concern.” Some crypto [investors are now turning](https://www.financedigest.com/certainty-in-an-uncertain-world-post-brexit-investors-turn-to-commercial-property-and-fixed-returns.html "Certainty in an uncertain world – post-Brexit investors turn to commercial property and fixed returns") their attention to the next event that could shake up prices. The next significant [upgrade for Ethereum](https://www.financedigest.com/cryptoverse-ethereum-upgrade-to-unlock-33-billion.html "Cryptoverse: Ethereum upgrade to unlock billion") is the “Shanghai”, expected by market participants in around six months’ time, which is aimed at reducing its high transaction costs. It would allow validators, who have deposited ether tokens on the blockchain in exchange for a yield, to withdraw their staked coins, to [hold or sell](https://www.financedigest.com/orban-tightens-hold-over-telco-sector-as-vodafone-sells-hungarian-unit-2.html "Orban tightens hold over telco sector as Vodafone sells Hungarian unit"). There’s a lot at stake: over $20 billion of ether deposits are currently locked up, according to [data provider](https://www.financedigest.com/comparative-analysis-of-the-best-data-room-providers.html "Comparative Analysis of the Best Data Room Providers") Glassnode. The [staked ether crypto](https://www.financedigest.com/what-crisis-high-stakes-crypto-lending-looks-here-to-stay.html "What crisis? High-stakes crypto lending looks here to stay") coin – viewed as a bet on Ethereum’s long-term success as it cannot be redeemed until Shanghai happens – is trading at nearly parity with ether at 0.989 ether, according to CoinMarketCap data, indicating confidence in future upgrades. The coin had dropped as [low as 0.92 in June](https://www.financedigest.com/sterling-steadies-near-june-2020-low.html "Sterling steadies near June 2020 low"). PURGE AND SPLURGE Beyond Shanghai, a slew of other [upgrades are planned for Ethereum](https://www.financedigest.com/ethereum-software-upgrade-activated-ether-reverses-losses-trades-up.html "Ethereum software upgrade activated; ether reverses losses, trades up"), which co-founder Vitalik Buterin has nicknamed “the surge”, “verge”, “purge” and “splurge. The primary focus of [future upgrades is likely to be on the blockchain’s](https://www.financedigest.com/why-blockchain-could-represent-the-future-of-cross-border-payments.html "Why blockchain could represent the future of cross-border payments") ability to process more transactions. Because the Merge was delayed for several years, investors, traders, and end-users have a great deal of trepidation around when Ethereum will meaningfully scale,” said Alex Thorn, head of firmwide research at blockchain-focused [bank Galaxy Digital](https://www.financedigest.com/the-journey-towards-a-digital-bank-five-major-stages-to-successful-banking-digitalisation.html "THE JOURNEY TOWARDS A DIGITAL BANK – FIVE MAJOR STAGES TO SUCCESSFUL BANKING DIGITALISATION"). Paul Brody, global blockchain leader at EY, said: “Ethereum’s future needs to, and will, scale to hundreds of [millions of transactions a day.”](https://www.financedigest.com/royal-mail-says-uk-business-losing-one-million-pounds-a-day-amid-union-clash.html "Royal Mail says UK business losing one million pounds a day amid union clash") ![](https://www.globalbankingandfinance.com/wp-content/uploads/2022/09/chart.jpg) ETHEREUM KILLERS The Merge’s primary goal was to reduce Ethereum’s energy usage as cryptocurrencies come under fire for their massive [carbon footprint](https://www.financedigest.com/ecb-can-cut-carbon-footprint-by-shedding-bonds-of-biggest-polluters.html "ECB can cut carbon footprint by shedding bonds of biggest polluters"). The blockchain’s [energy consumption was cut](https://www.financedigest.com/france-strains-to-avert-power-cuts-as-cold-snap-tests-europes-energy-resolve.html "France strains to avert power cuts as cold snap tests Europe’s energy resolve") by an estimated 99.95%, the developers claim, which could tempt powerful institutional investors, formerly constrained by environmental, social and governance (ESG) concerns. The Merge and [future upgrades also dent the investment](https://www.financedigest.com/investing-in-the-city-thats-investing-in-itself-welcome-to-the-liverpool-of-the-future.html "INVESTING IN THE CITY THAT’S INVESTING IN ITSELF – WELCOME TO THE LIVERPOOL OF THE FUTURE!  ") appeal of so-called “Ethereum killer” blockchains like Solana and Polkadot, said Adam Struck, CEO of venture capital firm Struck Crypto. However, institutional investors aren’t jumping in just yet, as a fearsome macro environment chills the waters of [risk appetite](https://www.financedigest.com/u-s-dollar-climbs-to-two-year-peak-as-risk-appetite-tumbles-yuan-drops.html "U.S. dollar climbs to two-year peak as risk appetite tumbles; yuan drops"). Longer-term, though, the switch to PoS is [expected to decrease the rate](https://www.financedigest.com/ecbs-makhlouf-expects-50-bps-rate-hike-in-december.html "ECB’s Makhlouf expects 50 bps rate hike in December") at which ether tokens are issued – potentially by up to 90% – which should drive up prices. Additionally, annual yields of 4.1% for [staking ether tokens to validate transactions could prove tempting for investors](https://www.financedigest.com/german-investor-kuehne-does-not-plan-to-further-boost-lufthansa-stake-faz.html "German investor Kuehne does not plan to further boost Lufthansa stake – FAZ"). However, while the proof-of-stake method allows for these lucrative yields, many [crypto purists point out that it moves](https://www.financedigest.com/exclusive-binance-moved-346-million-for-seized-crypto-exchange-bitzlato-data-show.html "Exclusive-Binance moved 6 million for seized crypto exchange Bitzlato, data show") Ethereum away from a purely decentralized model as the biggest validators could exercise greater influence over the blockchain. For the time being, however, the Ethereum world might be advised to enjoy the Merge moment. There may be volatility in the [days to come,” said analysts](https://www.financedigest.com/these-days-tik-tokers-can-move-markets-more-than-investment-analysts.html "These days Tik-Tokers can move markets more than investment analysts…") at Kaiko Research. “But for now the community can take a well-earned victory lap.” (Reporting by Lisa Pauline Mattackal and Medha Singh in Bengaluru; Editing by Pravin Char) --- This blog is powered by Superblog. 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