Ethereum developers have successfully merged the blockchain’s execution and consensus layers on the Kiln testnet. The achievement has market participants already anticipating the positive effects that the mainnet transition to PoS will have on the price of Ether (ETH).
Ethereum’s transition to PoS will likely be positive for ETH
Several factors are being noted for the bullish developing bullish sentiments for ETH. For one, Ethereum’s becoming a proof-of-stake blockchain will have the immediate effect of cutting down the energy requirements of the network. By some estimates, shedding proof-of-work mining will result in a 99.95% drop in the energy consumption of the network.
The issuance of ETH will also drop significantly following the mainnet merge. A 90% ETH issuance reduction, akin to three Bitcoin halvings, is expected following the merge. The current emission rate of 12,000 ETH a day will be cut to 1280 ETH, resulting in ETH issuance becoming deflationary in the months after the merge.
This will be accompanied by a 50%-100% increase in rewards for Ether staking participants. Rewards for PoS validators will increase from 4.5% to as high as 10-15%.
All these changes are likely to invest in Ether a no-brainer following the merge. The increased energy efficiency is likely to have the effect of attracting energy consumption-conscious investors to the Ether market.
The overall efficiency improvements and scalability potential that PoS will bring are also likely to bring more adoption of the Ethereum blockchain.
However, the merge still has some way to go before it becomes reality and no date has yet been announced. The Kiln testnet that was deployed this week is still being observed for stability, although it has been functioning as expected. The next move will be the upgrading of other tests and finally the mainnet.
ETH is currently trading bullish amidst other market positives
ETH holders have been applauding the final merge testnet, calling it highly bullish. A surge in the price of the token has also corresponded with the strides being made towards PoS.
On the day, ETH is changing hands at around $2,750, up 4.04%, and 6.75% in the last week. The bullish ETH price action has also spilled over to the stocks of Ethereum affiliated companies.
ConsenSys, an Ethereum infrastructure development company, recently raised $450 million in a Series D funding round to reach a $7 billion valuation.
Similarly, the stocks of Coinbase today saw an upclime of 10.61% at $172.53 per share on Nasdaq.
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The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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Source: https://coingape.com/ethereum-proof-stake-pos-merge-successful-kiln-testnet/