It has been confirmed that the Ethereum Consensus Layer will be launched as soon as August 2022.
After years of delays, “the Merge” is finally here. However, there is some concern over what will happen to the price of Ethereum (ETH) once proof-of-work is turned off.
Currently, over 13 million ETH is staked in ETH 2.0, and there are concerns that this $26 billion worth of ETH will flood the market following the Merge as investors unstake and sell the news.
Self-proclaimed DeFi educator and member of DeFi Omega Korpi broke down the potential impact of The Merge and the resulting unlocking of millions of ETH.
Staked ETH won’t be unlocked immediately
Korpi pointed out that “the Merge won’t enable withdrawals,” as that is “planned for another Ethereum upgrade” slated to occur after roughly six months to one year. Korpi explained further that:
“To withdraw $ETH, a validator must exit the active validator set but there is a limit to how many validators can exit per epoch.
There are currently 395k validators (active + pending). If no new ones are set up (highly unlikely), it will take 424 days for all of them to exit.”
Unlocked ETH will be released slowly
Korpi elaborated that even with withdrawals enabled:
“there will be an exit queue which may take more than a year in the worst-case scenario or several months in a more realistic one. The release will be slow.”
Korpi’s final point regarding The Merge is that most users who have staked ETH with validators are most likely ETH-maximalists and are not interested in selling at current prices.
Liquid staking
Further, there are already ways for ETH stakers to access liquidity from their staked tokens. For investors who are not running their validator nodes, it is common to receive tokens such as bETH in return for staking ETH with a validator.
These bETH tokens are tradeable on the open market, thus releasing liquidity….
Click Here to Read the Full Original Article at Ethereum – CryptoSlate…
