{"id":14835,"date":"2022-04-19T15:29:05","date_gmt":"2022-04-19T09:59:05","guid":{"rendered":"https:\/\/zebpay.com\/?p=14835"},"modified":"2022-04-19T15:29:05","modified_gmt":"2022-04-19T09:59:05","slug":"impact-of-delay-in-ethereum-merge","status":"publish","type":"post","link":"https:\/\/zebpay.com\/au\/blog\/impact-of-delay-in-ethereum-merge","title":{"rendered":"Impact of delay in Ethereum\u2019s merge: A perspective"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/zebpay.com\/au\/blog\/impact-of-delay-in-ethereum-merge\/#Weekly_Fees\" title=\"Weekly Fees\">Weekly Fees<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/zebpay.com\/au\/blog\/impact-of-delay-in-ethereum-merge\/#Impact_on_Exchanges_Netflows\" title=\"Impact on Exchanges Netflows\">Impact on Exchanges Netflows<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/zebpay.com\/au\/blog\/impact-of-delay-in-ethereum-merge\/#Impact_on_staking_due_to_the_delay_of_ETHs_Merge\" title=\"Impact on staking due to the delay of ETH\u2019s Merge\u00a0\">Impact on staking due to the delay of ETH\u2019s Merge\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/zebpay.com\/au\/blog\/impact-of-delay-in-ethereum-merge\/#ETH_breaches_the_10_million_mark\" title=\"ETH breaches the 10 million mark\">ETH breaches the 10 million mark<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/zebpay.com\/au\/blog\/impact-of-delay-in-ethereum-merge\/#Decline_in_fees_by_75_%E2%80%93\" title=\"Decline in fees by 75% &#8211;\u00a0\">Decline in fees by 75% &#8211;\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/zebpay.com\/au\/blog\/impact-of-delay-in-ethereum-merge\/#6_Is_The_New_12_%E2%80%93\" title=\"6% Is The New 12% &#8211;\">6% Is The New 12% &#8211;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/zebpay.com\/au\/blog\/impact-of-delay-in-ethereum-merge\/#The_underperformance_of_Crypto_Stocks_A_perspective\" title=\"The underperformance of Crypto Stocks: A perspective\">The underperformance of Crypto Stocks: A perspective<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/zebpay.com\/au\/blog\/impact-of-delay-in-ethereum-merge\/#COIN_Hits_an_All-Time_Low_%E2%80%93\" title=\"COIN Hits an All-Time Low &#8211;&nbsp;\">COIN Hits an All-Time Low &#8211;&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/zebpay.com\/au\/blog\/impact-of-delay-in-ethereum-merge\/#Lower_Returns_Greater_Volatility_%E2%80%93\" title=\"Lower Returns, Greater Volatility &#8211;\u00a0\">Lower Returns, Greater Volatility &#8211;\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/zebpay.com\/au\/blog\/impact-of-delay-in-ethereum-merge\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n\n<p>Ethereum&#8217;s transition to proof of stake has been delayed. The result: it has had a great impact, both on rewards staking as well as the broader network. That\u2019s not all: this has also resulted in the sub-par performance of crypto stocks with Coinbase hitting an all-time low.<\/p>\n\n\n\n<p>So, here we look at various impacts due to the delay<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-weekly-fees\"><span class=\"ez-toc-section\" id=\"Weekly_Fees\"><\/span><strong>Weekly Fees<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Overall, Blockchain fees have plummeted. Both Bitcoin and Ethereum have witnessed a whopping 33% decline in relation to the previous week.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Impact_on_Exchanges_Netflows\"><\/span><strong>Impact on Exchanges Netflows<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Outlined below are the cryptos that have abandoned various exchanges:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Approximately half a billion worth of Bitcoin has left the centralised exchanges. Further,\u00a0 investors are apparently eager to accumulate near the $40k level<\/li><li>The inflows recorded by ETH stand approximately to the tune of $100M\u2026all into centralised exchanges, subsequent to four consecutive weeks of heavy outflows.<\/li><\/ul>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-impact-on-staking-due-to-the-delay-of-eth-s-merge\"><span class=\"ez-toc-section\" id=\"Impact_on_staking_due_to_the_delay_of_ETHs_Merge\"><\/span><strong>Impact on staking due to the delay of ETH\u2019s Merge\u00a0<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It is being said that the much-anticipated ETH 2.0 merge will never be ready at least by the June target that Ethererum developers had set last year. Once implemented, the merge would have marked Ethereum&#8217;s transition to proof of stake, thereby minimising its consumption of energy even as it makes the network a lot more secure and profitable to stake in.\u00a0\u00a0In fact, that final part had been one of the most awaited features, with the community rallying behind what was initially projected to be 12% to 15% APYs for staking following the <a href=\"https:\/\/zebpay.com\/blog\/what-is-ethereum-merge\/\">ethereum merge<\/a>. However, several conditions have changed since then, and the on-chain metrics are pointing towards significantly lower staking yields, once the merge comes into effect.<\/p>\n\n\n\n<p><img decoding=\"async\" width=\"602\" height=\"265\" src=\"https:\/\/lh6.googleusercontent.com\/5dwHqL0T-U-NXCdpYWlFZM2wtX4qCIJyLy5GjDKUl6OkEFJOfaUguKMDz7UBxdrOgYri_zRez-OmHjPrhdnGOGFjYFNdLdHN1OKNO3Yq_SSPRElpRWJhwqYN9_BUDc-d0J0E1UCE\" alt=\"Screen Shot 2022-04-14 at 2.57.10 PM\"><\/p>\n\n\n\n<p class=\"has-text-align-center\"><\/p>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"ETH_breaches_the_10_million_mark\"><\/span><strong>ETH breaches the 10 million mark<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The amount of Ether that has been staked continues to grow and has exceeded the 10 million mark<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>This signifies approximately 9.5% of Ether&#8217;s circulating supply that is currently locked within the staking contract<\/li><li>In dollar terms the growth has the potential to appreciate with the value staked nearing all-time highs despite ETH&#8217;s price being down 37%<\/li><li>There has been a steady acceleration in growth with the launch of&nbsp; stETH\u2013 a staking derivative token, that can be used as collateral on the Aave lending protocol<\/li><\/ul>\n\n\n\n<p>While the growth in the amount of ETH staked makes the network more secure, it also means that the rewards received for protecting the network decrease proportionally. With the delay of the merge by another few months, it is likely that the amount of ETH staked will grow even further, thus resulting in lower yields.\u00a0The amount of ETH staked is one of the crucial factors affecting the staking APYs following the merge. Another factor is the fees that the Ethereum network processes.<\/p>\n\n\n\n<p><img decoding=\"async\" width=\"602\" height=\"269\" src=\"https:\/\/lh6.googleusercontent.com\/gA0KibNSrvlc-15zMSab7t3ezR-inaZTKBlvGRG1sxTkCQrGcHSUIBbvVxI7t0uRx2_j37RoXIUKt5Z-amlKUTN60GkxtC83GL2ZIKWRTHGORZLjMpqEv26t-ZuXgk_JMaTpZBcB\" alt=\"Screen Shot 2022-04-14 at 4.23.53 PM-1\"><\/p>\n\n\n\n<p class=\"has-text-align-center\"><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Decline_in_fees_by_75_%E2%80%93\"><\/span><strong>Decline in fees by 75% &#8211;\u00a0<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The amount of fees paid to use Ethereum have&nbsp; substantially declined with drying up of activity in DeFi and NFTs.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>NFT volumes on OpenSea have plummeted from a relative high of approximately $250M on February 1st to $70M as on April 14<\/li><li>Trading volumes on Uniswap have decreased, albeit to a lesser extent&nbsp;<\/li><li>However, owing to the relatively sideways market trend, arguably there has been a lower urgency to execute transactions, resulting in traders being less willing to pay high fees.&nbsp;<\/li><\/ul>\n\n\n\n<p>In its current form of <a href=\"https:\/\/zebpay.com\/blog\/why-proof-of-work-works\/\">proof of work<\/a>, Ethereum fees that have not been burned go to miners. Once the merge with the <a href=\"https:\/\/zebpay.com\/blog\/overview-on-proof-of-stake-pos\/\">proof of stake<\/a> chain takes place, these fees will be provided to those staking in compensation for securing the network. Thus, the declining levels of network activity have taken a toll on the financial interests of all the Ether holders.<\/p>\n\n\n\n<p><img decoding=\"async\" width=\"602\" height=\"293\" src=\"https:\/\/lh5.googleusercontent.com\/RwWoBUchhPUroFa2XDOT2KYxPZRSJ4RkajjuUHet9Yc9zJPIkuopZJvoStfzFmSyHCvUS-8OvNtt-MuOq4AkOh0IMSQYL8Fwe9d4QtH0yUDC2j0SW0djuK-33PwrfEe9fxYsxJDN\" alt=\"Screen Shot 2022-04-14 at 11.32.06 PM\"><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"6_Is_The_New_12_%E2%80%93\"><\/span><strong>6% Is The New 12% &#8211;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Given the recent trends over the last 7, 30, and 90 days respectively, the Ethereum staking APR is likely to be within the range of 6% to 8% should the merge go live on September<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>There has been a significant contraction of yields across cryptos as capital continues to flow in, with relatively less capital compensating for every deposit<\/li><li>Ethereum staking rewards are no exception either. The amount of <a href=\"https:\/\/zebpay.com\/in\/buy-ethereum\/\">ETH<\/a> staked has grown particularly rapidly over the past 30 days<\/li><\/ul>\n\n\n\n<p>Although these yields might be less attractive, they also reflect the maturation of Ethereum, which has over $35 billion being staked. This in turn provides greater security assurances as it makes it relatively costlier to attempt to control over half of the amount staked. Overall though, this could be better for the Ethereum Although these yields might be less attractive, they also reflect the maturation of Ethereum, which has over $35 billion being staked. This in turn provides greater security assurances as it makes it relatively costlier to attempt to control over half of the amount staked. Overall though, this could be better for the Ethereum network even though it may disappoint all those who are seeing lower APRs than expected by the time the merge (eventually) goes live.\u00a0<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_underperformance_of_Crypto_Stocks_A_perspective\"><\/span><strong>The underperformance of Crypto Stocks: A perspective<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><img decoding=\"async\" width=\"602\" height=\"320\" src=\"https:\/\/lh4.googleusercontent.com\/O_AN2HCovo5SLyhJ5xbfCl9zIpgnM_eJLXBzwEI8axGT624lQ8-rJm7xkyMrHBEHpW6pB6C3d-v1Nhoo0E2dAILHzkmTdKI5OewStcSoFuIB1SUe1mFbZRvOYLAcox71qYvcdw11\" alt=\"Screen Shot 2022-04-14 at 3.25.51 PM-2\"><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"COIN_Hits_an_All-Time_Low_%E2%80%93\"><\/span><strong>COIN Hits an All-Time Low &#8211;&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The largest publicly-traded crypto company has hit its lowest valuation since it went public almost a year ago<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Even though Coinbase has closely followed crypto prices, it has lagged behind Bitcoin and even more so behind Ethereum<\/li><li>The trend is reflected across the entire crypto stocks, with Bakkt being down 63% and the exchange Voyager by as much as 80% during the past year<\/li><\/ul>\n\n\n\n<p>When adjusted for volatility, it indicates that most crypto stocks still underperform.<\/p>\n\n\n\n<p><img decoding=\"async\" width=\"602\" height=\"240\" src=\"https:\/\/lh5.googleusercontent.com\/8JCgRySpzaCGFguqbr5JQpAC-X4usQ1pUp1xenQXIvTw18LARHwcF14jKUqfWB8ygy7qkj1p_wIEsSKtpfjBZgtwckjq_rR6l4NNirinDnJwI7kB0x1g3J4fw1-wZh3IiNXs3WR_\" alt=\"Screen Shot 2022-04-14 at 6.12.46 PM\"><\/p>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Lower_Returns_Greater_Volatility_%E2%80%93\"><\/span><strong>Lower Returns, Greater Volatility &#8211;\u00a0<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Contrary to the popular belief, Bitcoin and Ethereum have in fact been less volatile when compared to many other stocks, especially those that have crypto offerings<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The Sharpe ratio accounts for returns relative to price volatility. In this regard, most crypto companies either match or underperform Bitcoin<\/li><li>The Sortino ratio considers returns relative only to downside volatility. Here Bitcoin performs much better than MicroStrategy and Coinbase&#8217;s stocks<\/li><\/ul>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The notion of &#8220;risk&#8221; may be fluid. With crypto-assets significantly outperforming crypto companies, traditional investors may want to reconsider the best route to gain exposure to the industry.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Ethereum&#8217;s transition to proof of stake has been delayed. The result: it has had a great impact, both on rewards staking as well as the broader network. That\u2019s not all: this has also resulted in the sub-par performance of crypto stocks with Coinbase hitting an all-time low. So, here we look at various impacts due [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":14839,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[14],"tags":[],"class_list":["post-14835","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crypto"],"acf":[],"_links":{"self":[{"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/posts\/14835","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/comments?post=14835"}],"version-history":[{"count":0,"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/posts\/14835\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/media\/14839"}],"wp:attachment":[{"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/media?parent=14835"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/categories?post=14835"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/tags?post=14835"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}