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Tag: ethereum 2.0 updates

  • Ethereum ($ETH) Merge: What is it and everything you need to know

    Ethereum ($ETH) Merge: What is it and everything you need to know

    As Ethereum is steadily approaching the transition to a Proof-of-Stake mechanism, one notable thing that has changed, aside from further protocol development, has been the change in terminology.

    We have already covered Ethereum 2.0 extensively in one of our ongoing blogs where we go in-depth on everything you need to know about Ethereum’s transition to PoS:

    Let’s take a closer look at the rebranding from Ethereum 2.0 to the Ethereum Merge, as well as go over the most recent developments in Ethereum’s roadmap as of May 2022.

    Check out our latest video- Ethereum Merge: ALL you need to know (including ETHPOW)

    Ethereum Merge: ALL you need to know (including ETHPOW)

    And check out our video- Ethereum Merge: Things you don’t (but need) to know as an investor

    The Ethereum Merge: Why the shift from Eth2.0?

    The term “Eth2.0” was retired in early 2022 to avoid confusion and scams, and to better reflect Ethereum’s evolution—not replacement. The Merge, completed in September 2022, unified Ethereum’s original execution layer with the Beacon Chain’s Proof-of-Stake consensus. By 2025, this rebranding has proven prescient: Ethereum’s roadmap has expanded far beyond the original Eth2.0 vision, with Layer 2 rollups, proto-danksharding, and modular scaling now driving innovation. The shift in terminology helped clarify that Ethereum remains one chain, continuously upgraded—not split or replaced.

    ETH Merge is a huge success!

    On 15th September 2022 at 06:42:42 UTC at block 15537393, the Merge was completed.

    Missed our historical LIVE Merge party? Check it out here!

    Ethereum Merge Party – Watch the Merge live!

    Ethereum Post-Merge: Where Things Stand in 2025

    Since the successful Merge on 15th September 2022, Ethereum has fully transitioned to Proof-of-Stake, eliminating mining and reducing energy consumption by over 99%. The focus has shifted from testing Merge readiness to scaling and optimizing the network. Key milestones since the Merge include:

    • Staking Growth: Over 30 million ETH is now staked, with thousands of validators securing the network.
    • Scalability Upgrades: Proto-danksharding (EIP-4844) was implemented in late 2024, significantly reducing Layer 2 fees and paving the way for full sharding.
    • Layer 2 Expansion: Rollups like Optimism, Arbitrum, and zkSync have seen explosive growth, handling the majority of Ethereum transactions.
    • Institutional Adoption: Ethereum’s energy-efficient design and predictable monetary policy have attracted major financial institutions and enterprise use cases.

    The Merge is no longer a future milestone—it’s the foundation for Ethereum’s next phase: modular scalability, global adoption, and sustainable infrastructure.

    Why the Ethereum Merge Still Matters to Crypto Traders in 2025

    Although the Merge was completed nearly three years ago—on 15th September 2022—it continues to influence Ethereum’s trading dynamics in significant ways. Here’s why it remains relevant to traders today:

    Reduced ETH Supply and Market Scarcity

    • The Merge reduced ETH issuance by approximately 90%. Combined with EIP-1559’s fee-burning mechanism, Ethereum has become deflationary during periods of high network activity.
    • This scarcity has strengthened Ethereum’s position as a store of value, attracting long-term investors and institutional interest.

    Staking Rewards and Yield Opportunities

    • ETH holders can earn staking rewards by locking up their tokens. As of August 2025, staking yields range between 4% to 6%, depending on network conditions.
    • Traders now consider staking returns when evaluating ETH’s opportunity cost relative to other assets.

    Layer 2 Growth and Transaction Efficiency

    • The Merge enabled scalability upgrades such as proto-danksharding (EIP-4844), which significantly lowered Layer 2 transaction fees.
    • A majority of ETH trading now occurs on rollups like Arbitrum, Optimism, and zkSync, offering faster execution and lower costs.

    Environmental Sustainability and Institutional Access

    • Ethereum’s energy consumption dropped by more than 99% post-Merge, making it one of the most environmentally sustainable blockchains.
    • This shift has made ETH more appealing to ESG-conscious investors and funds that previously avoided energy-intensive assets.

    Price Behavior and Market Sentiment

    • ETH’s price has shown resilience, supported by reduced sell pressure, staking lockups, and expanding utility across DeFi and NFTs.
    • Traders monitor staking inflows, validator performance, and Layer 2 activity as key indicators for ETH price trends.

    Since the Ethereum Merge on 15th September 2022, ETH’s price trajectory has been shaped by a mix of protocol-level changes, macroeconomic factors, and evolving market sentiment. Here’s a breakdown of how prices have responded and what traders are watching now:

    Initial Reaction and Short-Term Volatility

    • In the hours following the Merge, ETH saw a modest price increase, briefly peaking above US$1,640 before settling below US$1,600.
    • Traders were cautious, anticipating potential forks or technical disruptions, which kept early momentum subdued.

    Medium-Term Consolidation and Staking Dynamics

    • As staking rewards became more accessible and the supply of ETH decreased due to reduced issuance and fee burning, ETH entered a period of steady accumulation.
    • By mid-2023, ETH had stabilized in the US$1,800–US$2,200 range, supported by growing validator participation and reduced sell pressure.

    Long-Term Growth and Institutional Interest

    • The implementation of proto-danksharding in late 2024 significantly lowered Layer 2 transaction costs, boosting network activity and reinforcing ETH’s utility.
    • By August 2025, ETH is trading above US$3,000, driven by deflationary pressure, staking lockups, and increased adoption across DeFi, NFTs, and enterprise applications.

    Key Price Drivers in 2025

    Environmental Appeal: Ethereum’s energy-efficient design has made it a preferred asset for ESG-focused investors.

    Deflationary Supply: With issuance down and EIP-1559 continuing to burn fees, ETH’s circulating supply has declined, supporting upward price pressure.

    Staking Yield: ETH staking yields remain attractive, encouraging long-term holding and reducing market liquidity.

    Layer 2 Ecosystem: Rollups now handle the majority of Ethereum transactions, improving user experience and expanding use cases.

  • Will the Launch of Ethereum 2.0 Crash Crypto Prices?

    Will the Launch of Ethereum 2.0 Crash Crypto Prices?

    Ethereum 2.0 is coming soon and the question everyone wants to know is “will it cause crypto prices to crash?” This is particularly as markets around the globe are not looking great, and that includes the crypto industry. Everything has been bleeding heavily for months without a sign of stopping, as central banks keep hiking rates, global supply chains struggle, and spending and investment dry up. Stagflation is a very real possibility, and there is no telling how long it will take for us to cool down the overheated markets that have been going only up since the last recession more than ten years ago. 

    The aforementioned notwithstanding, active development in the blockchain space continues to march forward. Although investments might drop significantly, many builders keep on building no matter the state of the markets. As Ethereum is steadily approaching the long-awaited transition from proof-of-work (PoW) to proof-of-stake (PoS), dubbed The Merge, it might be interesting to think about potential impacts of The Merge on the crypto market prices, especially in the context of a potential extended bear market.

    Learn more: 

    Ethereum 2.0 is coming- Here’s what you NEED to know

    Proof of Stake (PoS) explained

    Ethereum ($ETH) Merge: What is it and everything you need to know

    Plus check out our video!

    About Ethereum 2.0

    In short, The Merge will result in Eth2.0’s Beacon chain (the coordination mechanism of the new network) merging with the current Ethereum mainnet, signifying the move to a fully PoS chain. To secure the network, enormous amounts of ETH will be staked in addition to the ETH already staked in the Beacon chain, making all of this locked ETH illiquid. Combined with the EIP-1559 upgrade, which now burns 70-80% of the fees, The Merge is expected to cause the equivalent of 3 bitcoin halvenings, dropping Ethereum’s inflation rate to 0.43% and locking up a lot of ETH, potentially reducing sell pressure by up to 90%. In addition, the PoS mechanism will reduce Ethereum’s energy consumption by up to 99.95%.

    So all is looking great for Ethereum and projects building on top of it, right? Possibly. However, there is still a decent chance that, given the current market conditions, ETH’s price pump might be short-lived, and would continue to drop, bringing down a lot of other projects with it.

    The Potential Impacts of The Merge

    There are two possible scenarios to look at when discussing the downside impact of The Merge on crypto prices:

    1. The external effect would be caused by Ethereum sucking out liquidity from other PoS alt-L1s and the projects built on top of them (especially if they’re EVM-compatible), as one of the more critical selling points compared to Ethereum is environmental sustainability.
    2. Beacon chain staked ETH unlocks, extended bear market, and poor treasury management of Ethereum-backed projects could see more capitulation events as HODLers and projects sell off their ETH to stay afloat as new investments dry up and stagflation looms.

    1. Ethereum Sucks Liquidity From Other PoS alt-L1’s

    By offering lower gas fees, fast transactions, and relatively high throughput at the expense of decentralization and economic sustainability, many PoS chains have attracted developers, investors, and NFT ecosystems to their networks away from Ethereum. Ethereum’s high demand (=high fees), poor L1 scalability, and the concerning PoW mechanism have severely limited its growth. (https://rpdrlatino.com) Understandably, regular people simply do not want to pay exorbitant fees when minting and trading NFTs, and developing inaccessible dApps on a network that is supposedly destroying trees and warming up the planet.

    The environmental argument will be completely invalid after the merge. Coupled with the enormous innovations in Ethereum’s L2 ecosystem, which have already reduced transaction fees to sub-$1 with no signs of stopping, Ethereum is set to once again become the most sought-after smart contract development platform. As post-Merge buy pressure of ETH increases and scalability improves, alt-L1’s could struggle to offer any significant unique selling points, making new projects opt to build on top of the most secure, established and decentralized smart contract chain out there.

    As more and more people flock to Ethereum, established projects might also decide to migrate to the platform with the most demand and upside potential, effectively sucking out liquidity from other chains, and leaving them dry with evaporated treasuries, limited runway, and reduced demand. The strategy of subsidizing transaction fees during a bull market when funds are plentiful will likely not work when no new investments are coming in during a bear market, and an exodus of users is reducing demand and network revenues.

    Of course, there is plenty of room for growth in this space, and projects existing on other chains might not find it too beneficial to move to Ethereum even though short-term liquidity issues might prove challenging.

    2. Beacon Chain ETH Unlocks in Extended Bear Market Cause Mass Capitulation

    The Merge will unlock a lot of ETH, resulting in a potential aggressive selling spree that might have trickle-down effects on a lot of other coins, especially those that have tight correlation with their ETH pair, are ERC-20 tokens, or have been sitting on ETH treasuries to fund their development. A lot more downside risk due to a selloff is also a very real possibility for ETH and other coins simply due to bad timing (i.e. bear market – with recession slowly creeping into our daily lives due to central banks raising interest rates, supply chain issues, energy crises etc.), the unlocked ETH might serve as a critical lifeline for those who had confidently staked their ETH during the bull market.

    During the bear market, investments will be scarce, and projects that during the bull market had made the decision to not convert their treasury ETH to stablecoins are now seeing their wallets drop in value significantly, forcing them to capitulate by selling at low prices to cover their expenses.

    However, it is important to note that the ETH unlocked from the ETH staked on the Beacon chain will not be immediately available right after The Merge. Rather, this feature – EIP-4895: “Beacon chain push withdrawals as operations”, will be enabled during the Shanghai upgrade. It will probably be deployed much later after The Merge, with estimates ranging from a month to 6 months. This means that any amount of potential sell-off of unlocked ETH would come with a significant delay post-Merge, at which point it’s impossible to predict where the market might be in 6-12 months and how it will behave, with contradicting bullish and bearish narratives clashing against one another in an attempt to drive price in either direction.

    This option does seem a bit far-fetched, however, and no one knows how much more pain we will have to suffer before the momentum shifts towards the upside, so it’s best to be prepared for both the upside and downside, and not fall prey to only bullish narratives.

    Conclusion

    As outlined in the two main points, post-Merge many alt-L1 coins could face a risk of crashing even further due to risks associated with reduced liquidity in a bear market (for non-Ethereum coins), liquidity that might flow towards the Ethereum ecosystem due to its established security, track record, and newly acquired environmental sustainability.

    On the other hand, ETH and other ERC-20 tokens living on Ethereum also run a risk of crashing, if the post-Merge ETH unlock from the Beacon chain results in a mass sell-off of ETH, which could crash other coins and project treasuries.

    As this will be the first time the crypto industry experiences a recession or a stagflation, there is a lot of uncertainty about how low the market could go and, most importantly, how long it could stay so low. This is uncharted territory, so making comparisons with past cycles might not be particularly useful. Nations and companies will keep tightening their belts, and spending will significantly decrease across the board, leaving risk-on markets such as crypto vulnerable to a continued mass exodus to safer investments.

  • Ethereum 2.0 London Hard Fork Roll Out

    Ethereum 2.0 London Hard Fork Roll Out

    (as of August 24th, 2021)

    This is an update of an older article on Ethereum 2.0. Click here to read the previous version.

    London Hard Fork

    The highly anticipated Ethereum London Hard Fork upgrade went live on August 5th, 2021, which sent the price of ETH rallying to above $2,800 for the first time since June 7th on bullish sentiment. 

    The upgrade includes a fee reduction feature called EIP 1559, which burned more than 3,000 ETH in only a few hours since taking effect.

    The latest backward-incompatible upgrade to the Ethereum blockchain introduced five new Ethereum Improvement Proposals (EIPs), ushering in a new era for the transition to Ethereum 2.0. 

    EIP 1559, EIP 3554, EIP 3529, EIP 3198 and EIP 3541 are code upgrades that aim to improve the network’s user experience and value proposition.

    It is fair to say that the London upgrade received more media attention than previous upgrades, but rightfully so as this upgrade represents an important step forward for the cryptocurrency, proving that the Ethereum ecosystem is able to make significant changes. 

    That’s in stark contrast to Bitcoin, which is so decentralized that changes to its blockchain network are incredibly difficult.

    The Ethereum blockchain still has major changes ahead, most notably its transition to a proof-of-stake (POS) system from a proof-of-work (POW) system. One of the biggest criticisms faced by Ethereum is its heavy energy usage and carbon emissions released during ether mining through proof-of-work.

    A proof-of-work system relies on a network of computers around the world constantly running to solve complex problems to support and validate the blockchain. A proof-of-stake platform, which does not incentivize heavy energy consumption, allows users to put up their own tokens as collateral to support the blockchain network.

    According to its founder Vitalik Buterin in an interview with Bloomberg, the change to proof-of-stake will reduce carbon emissions related to the mining of ether by 99%. Buterin expects the merge to Ethereum 2.0 to take place in early 2022 but it could come as early as late 2021. 

    The London hard fork “definitely makes me feel more confident about the merge.” Buterin told Bloomberg, going on to add that the transition to a proof-of-stake system would eventually change the economics of ether, such as a supply cap similar to bitcoin’s 21 million coin limit.

    EIP 1559 – Making Ethereum less inflationary

    The EIP 1559 upgrade is the most discussed code change of the London hard fork, altering the transaction fee structure for the Ethereum network. Instead of fees going directly to the miners that process and validate transactions, a base fee would instead go to the miners and to the network before being burned and removed from circulation.

    EIP 1559 removed the first-price auction as the main gas fee calculation, where users typically bid a dedicated amount of money to pay for their transaction to be processed on the Ethereum blockchain. 

    Gas fees are fee payments required from users who create transfers or transactions on the Ethereum blockchain. Previously, users paid these fees without knowing the exact price to pay beforehand. In order to make sure the transaction gets processed, some users overpaid to ensure the transaction went ahead smoothly. Other users who paid less faced the uncertainty of whether the transaction will get processed in a timely manner.

    The EIP 1559 changed the method by which transactions are processed on the blockchain by enabling clear pricing on a base transaction fee paid to miners in ETH to validate the transfers. A small amount of the tokens will be burnt and taken out of the circulating supply permanently. Users may also choose to include an optional tip, a “priority fee,” along with their base fee to incentivize miners for a quicker process if desired. 

    As a result of its activation, EIP 1559 improved user experience by automating transaction prices and taking the guesswork out of an opaque auction process, while still allowing miners to earn from tips and block rewards.

    EIP 3554 – Defusing the difficulty bomb

    EIP 3554 delays the “difficulty bomb” that is coded to make mining more difficult, essentially “freezing” it in preparation for Ethereum’s transition away from a proof-of-work model. 

    Also called the “Ice Age,” the difficulty bomb is intended to disincentivize miners from using proof-of-work once Ethereum 2.0 is ready by making block rewards much harder to come by. EIP 3354 pushes the Ice Age back to December 1st, 2021, hinting that the merge with Ethereum 2.0 may happen at the end of the year. 

    This is the fourth time that the difficulty bomb has been delayed, and unless the network is finally ready to move to proof-of-stake by the end of the year, it’s likely to be delayed once again in yet another network upgrade.

    EIP 3529 – Reducing impact-less refunds

    EIP 3529 reduces gas refunds, which were typically used to incentivize developers to reduce or delete unused smart contracts and addresses on Ethereum. 

    “Gas tokens” like Chi and GST2 gamed the system by taking up space on the network when gas fees were low and reaping the benefits by deleting their data when gas fees were high. With the implementation of EIP 3529, these tokens will become obsolete.

    EIP 3198 – Improving smart contract UX

    EIP 3198 improves the user experience of smart contracts by adding an operation code (opcode) that gives the EVM (Ethereum Virtual Machine) access to the block’s base fee.

    The base fee is a small amount of Ether paid for each block created which can help with gas efficiency and reduction in transaction costs. Some applications will be able to use this fee, and other applications may choose not to use this opcode in their smart contract code if they do not need it. 

    This improves the user experience of smart contracts by increasing the security for state channels, plasma, optimistic rollups and other solutions that prevent fraud. 

    EIP 3541 – Making future updates easier

    EIP 3541 sets up future upgrades to the Ethereum Virtual Machine (EVM) by removing the ability to start new contracts with “0xEF or Executable Format.” 

    Although it won’t have an immediate effect on the network, it sets up future changes and restricts the EVM from consuming specific data types. 

    ETH 2.0 Becomes The Leading Holder of Ether

    At present, the staking contract of Ethereum 2.0 has become the largest holder of Ether (ETH).

    According to blockchain analytics provider Nansen, the ETH 2.0 staking contract has surpassed Wrapped Ethereum (wETH) to become the single largest holder of ETH. Unlike Ether, Wrapped Ether adheres to the ERC-20 standard, making it the favored representation of ETH among decentralized finance protocols that use ERC-20 tokens.

    Alex Svanevik, the CEO of Nansen, put up his findings on Twitter on August 16th, 2021. According to the available data, the Beacon Chain’s deposit contract holds 6.73 million ETH – worth roughly $21.5 billion at current prices.

    nansen analytics data Ethereum 2.0
    Nansen analytics data

    By contrast, Nansen’s data suggests the Wrapped Ethereum contract holds 6.7 million ETH ($21.4 billion), followed by Binance with 2.29 million ETH ($7.3 billion).

    The quantity of Ether locked and staked on ETH 2.0 currently represents 5.7% of Ethereum’s circulating supply, according to CoinMarketCap. There are now 210,000 validators for the ETH 2.0 network, according to Beaconcha.in.

    Currently, Ether staked on ETH 2.0 is locked up and cannot be withdrawn from the contract until Ethereum’s forthcoming chain merge, which will meld the Ethereum and ETH 2.0 networks.

    According to Staking Rewards, ETH 2.0 is currently the third-largest proof-of-stake network by staked capitalization, ranking behind Cardano’s $49 billion and Solana’s $27.5 billion.

    FAQ

    What is the London hard fork?

    Ethereum’s London hard fork is an irreversible network upgrade consisting of five Ethereum Improvement Proposals (EIPs), all of which are code upgrades paving the way for the network’s transition in the future from proof-of-work to proof-of-stake.

    What is EIP 1559?

    EIP 1559 changes how transaction fees work on the Ethereum blockchain in two ways. First, it adds a base fee to every transaction that takes place on Ethereum. This base fee aims to lower overall costs to the user, because it will improve gas fee estimations.

    Second, transaction fees will no longer go to miners, but to the Ethereum network itself, before being burned and taken out of circulation.
    These base fees are set using an algorithm and there will be an additional option to pay a tip to the miners to prioritize a transaction.

    Burning base fees could result in a decreased supply of Ethereum, making ETH a deflationary currency.

    What are the other key takeaways from the London hard fork?

    The upgrades will provide a better smart contract use experience. Future updates of the network will become easier with the new proposals.

    The network delayed the difficulty bomb to provide more time for the transition towards Ethereum 2.0.

    Did the London hard fork create another token?

    No. Often hard forks will lead to the creation of another token (such as the fork that created Ethereum Classic in 2016). However, in this case, the London hard fork can be considered as a network upgrade. Ethereum protocols will change, but it will still be the one and only Ethereum.

    When is the transition to Ethereum 2.0?

    The merge to Ethereum 2.0 is expected to take place in early 2022 or possibly in late 2021.

    Sources:

    https://www.fxstreet.com/cryptocurrencies/news/over-9-million-ether-burned-following-ethereum-london-hard-fork-as-network-gears-up-to-eth-20-202108060156

    https://markets.businessinsider.com/news/currencies/ethereum-london-hard-fork-eip-1559-vitalik-buterin-carbon-emissions-2021-8

    https://www.coindesk.com/ethereum-hotly-anticipated-london-hard-fork-is-now-live

    https://cointelegraph.com/news/eth2-staking-contract-ranks-as-single-largest-ether-hodler-with-21-5b

    https://www.coindesk.com/valid-points-eip-1559-hasnt-affected-miner-revenue

    https://www.fxstreet.com/cryptocurrencies/news/what-is-ethereum-eip-1559-and-how-will-it-affect-eth-price-202108030445