Last updated on November 17th, 2022 at 01:45 pm
The Ethereum ‘Merge,’ one of the most significant technological changes to the blockchain since its inception in 2015, could be one of the few catalysts that could provide a much-needed boost to DeFi.
DeFi (decentralized finance) investors are hopeful that Ethereum’s relaunch will help the market emerge from its crypto winter, which has lasted over two months.
After the TerraUSD stablecoin crashed and rising inflation forced the Federal Reserve to tighten monetary policy. The DeFi sector, and its investors, who earn returns by trading and staking cryptocurrencies without the need for centralized intermediaries, witnessed a steep decline in asset values.
The Ethereum ‘Merge,’ one of the most significant technological changes to the blockchain since its inception in 2015, could be one of the few catalysts that could provide a much-needed boost to DeFi.
The Merge will change the Ethereum blockchain’s consensus mechanism from Proof-of-Work (PoW) to Proof-of-Stake (PoS). Under the new arrangement, miners are replaced by ether holders, who perform the same functions as miners. Despite several setbacks, core developers have made significant progress, and Ethereum co-founder Vitalik Buterin has stated that the update will take place in August.
Vance Spencer, a co-founder of venture capital company Framework Ventures, believes the Ethereum Merge will be the most important event in the crypto space this year. “When you consider how crypto markets frequently move, the largest event is usually Bitcoin halving, which reduces the quantity of Bitcoin in half,” he explained. “We’re seeing a 90 percent reduction in Ethereum supply in a matter of seconds.”
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