The upcoming merger announcement of the Ethereum blockchain this September took the crypto headlines. Crypto investors became enthusiasts to experience the smart and better functionalities of Ethereum (ETH) through this Ethereum Beacon merge. Crypto experts already anticipated that this launch would cause rising prices of the ETH blockchain products at an increasing rate in August and September. In the meantime, Staked ETH or stETH has raised a new all-time high record in the market for the upcoming launch of the Ethereum merge.
The Price Analysis :
At present, the price of stETH has converged several changes on the launch of the merge without any major hurdles in the cryptocurrency market.
Staked ETH is a token issued through the Lido protocol for crypto investors. It offers free exchange during the existence of staked ether on the Ethereum blockchain. stETH reacts as a bond of 1 ETH as the capital amount is giving an output of a 4% return annually. After the September launch of the merge, every crypto investor will get stETH and 1.04 ETH annually from the market.
According to some crypto analysts, the current stETH price seems like very low-risk premia packed with the Ethereum merge execution risk and also systemic risks, and smart contract risks. Crypto investors and crypto traders noticed the unexpected and sudden growth in Staked ETH prices to upgrade the Ethereum blockchain network ecosystem.
Alongside, the staking output is predicted to be doubled to 8% with the shift from Proof-of-Work to Proof-of-Stake beacon chain. Also, it causes the reduction of the total new ETH token issuance by 90%. Crypto investors are now getting a bullish sentiment in the market on ETH during investment in Staked ETH or stETH tokens in 2022.
Staked ETH has started its business at a huge discount to the second largest cryptocurrency Ethereum since June 2022. Though, stETH crypto investors are not able to redeem the tokens for ETH until six to twelve months post-Ethereum merge. Recently, Ethereum (ETH-USD) investors are awaiting what Ethereum’s price will be after The Merge.
Notably, according to the last 30 days’ data, ETH price is up 36% and up 114% since its lows ($882) in June. Currently, It’s one of the best-performing altcoins in the top 50.
Previous Scenario :
In 2015, the Ethereum protocol was launched. It became a truly revolutionary concept of smart contracts.
Now, each transaction on a blockchain should be validated by node operators or validators. When Ethereum was launched, the most established and popular mechanism for that kind of block validation was Proof-of-Work (PoW). This mechanism is still used by Bitcoin.
The on-chain transaction on Bitcoin takes a long time and it is more expensive than the other. On the contrary, web 3.0 applications look for scalable, fast, and cheap transaction approval mechanisms. One of the weaknesses of Ethereum was PoW. That was soon apparent at the time of “Defi Summer 2020”. At that time Defi applications exploded into the context (MakerDAO, Uniswap, Aave, Compound, etc.). Transactions were time-consuming and gas fees were also at a high rate.
The Mechanism :
Instead of miners, PoS depends on ETH takes to get validation of transactions. That is cleaner, faster, more scalable, and also cheaper.
This massive migration is extremely complicated and has changed the launching date several times. Though, after a long preparation of two years, the date for a shifting switch to PoS has been announced.
It is predicted that it could create some selling pressure from those who aim to get profits or have other reasons to increase capital and sell their ETH holdings.