Web3 VC heavyweight Amber Group has summed up some thoughts on the future of Ethereum (ETH) post-merger in terms of economics
- Here’s who will benefit from post-merger Ethereum (ETH)
- Ethereum Classic (ETC) will not accept ETH hash power exodus
Amber Group, a venture capital conglomerate focused on investing in crypto and Web3 startups, has released a report to cover the possible effects that the migration to PoS may have on the economic design of Ethereum (ETH).
Here’s who will benefit from post-merger Ethereum (ETH)
First, experts from Amber Group attempted to calculate the Ethereum (ETH) staking APY rate “as if the merger had taken place today.” According to their estimates, ETH stakers can get up to 8.47% in APY to lock their wealth in Beacon Chain mechanics.
The merger is coming 🔜.
For our latest report, we looked at what the merger does: for capital flows, circulating supply, MEVs, miners, forks, risk, and more.
— Steven (@skatensurf_) July 31, 2022
The Miner Extractable Value or MEV (“miners tax”) will be siphoned off by validators who manage to offer blocks in periods of increased volatility.
Additionally, MEV mining will be among the most influential centralizing factors in post-merger Ethereum (ETH) along with DoS mitigation opportunities. As of July 2022, Ethereum PoS Beacon chain staking appears to be heavily centralized, with Lido Finance dominating.
As reported by U.Today in a recent guide, Ethereum (ETH) is set to migrate to Proof-of-Stake (PoS) consensus from Proof-of-Work (PoW) consensus in September 2022.
Ethereum Classic (ETC) will not accept ETH hash power exodus
That said, Ethereum (ETH) miners will be forced to quit their business or migrate to another blockchain that uses the Ethash algorithm. This would mainly mean the race for Ethereum Classic (ETC) mining. This trend has brought ETC back into the top 20 cryptos by market capitalization, as explained by U.Today.
However, some miners have signaled their support for a hypothetical proof-of-work (PoW) fork of the old Ethereum (ETH). However, it is very unlikely that Ethereum (ETH) DeFi and the stablecoin infrastructure will somehow continue to use proof of work.
In addition, the coexistence of two Ethereum (ETH) ecosystems of tokens and applications will lead to major issues such as intellectual property rights, the Amber Group representative added.