The Merge is getting closer: The last steps

    11 Sep 2022

    Ethereum’s Bellatrix upgrade was successful

    Ethereum’s Merge came closer last week with its Bellatrix upgrade going live on Sept. 6. Bellatrix is the final step before the Ethereum blockchain switches to a proof-of-stake consensus model from its current proof-of-work model. The Bellatrix upgrade prepares Ethereum’s proof-of-stake Beacon Chain for The Merge with its mainnet Execution layer.

    The Merge’s final step is Paris, which is expected to occur next week, around Sept. 14—15. Beacon Chain (Consensus layer) validators will then take over from proof-of-work miners to start finalizing Ethereum’s mainnet blocks.

    Ethereum’s staking yield will be lower than expected

    The upcoming Merge sparked the overarching discussions around what yield to expect on Ethereum once it moves to proof-of-stake. There is a misconception based on historical data that Ethereum staking will pay out a yield as high as 12% post Merge. The current network usage and staking data give much lower yields.

    This isn’t to say the yield couldn’t reach the higher estimates, while it’s contingent on several factors, such as the burn amount and network activity. But unless there’s a big increase in market activity, those numbers are unlikely in the short term.

    Crypto firms offer Ethereum staking ahead of The Merge

    On Sept. 7, Binance.US and SEBA Bank announced Ethereum staking programs. 

    Binance.US launched its own Ethereum staking product, notably offering a starting annual percentage yield (APY) of 6% – just three months after launching staking services. While activating validator software requires users to deposit 32 ETH ($49,000), users of Binance.US will only have to commit a minimum of 0.001 ETH to stake on the platform. 

    Swiss crypto bank SEBA also launched its own Ethereum staking services aimed at institutions. Its Ethereum staking services will pay out rewards on a monthly basis, and adjustable lock-up periods are also available post-Merge.

    DeFi giant Aave stops loaning Ether ahead of The Merge

    Aave, a big decentralized lending platform, has invoked new rules to protect itself from several risks that could stem from a surge in borrowing demand for Ether (ETH) from crypto traders betting on the Ethereum blockchain’s upcoming technological overhaul.

    Between Aug. 30 and Sept. 2, the Aave community voted to stop loaning Ether, setting aside democratized finance’s free market principle to mitigate protocol-wide risks that may arise from Ethereum’s upcoming transition to a proof-of-stake consensus mechanism from a proof-of-work one.

    Ethereum Classic hits a record-high hash rate 

    Ethereum Classic has reached an all-time-high hash rate of 45 terahashes per second (TH/s), having grown more than 480% year to date.

    Ethereum Classic’s hash rate growth has likely resulted from increased miner activity on Ethereum Classic ahead of this month’s Ethereum upgrade known as The Merge, which will remove the need for transactions to be verified by miners.

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