Ethereum 2.0’s September Announcement Causes Eth to Surge
Since the beginning of summer, the price of most cryptocurrencies has dropped significantly. However, it appears that many of the most popular coins are now starting to climb back to levels that traders in the market became familiar with during 2021. Ethereum has led this charge, nearly doubling in price since its low of $850 at the end of June.
Eth Merge Announcement
The surging price comes in response to the latest announcement that Ethereum developers are now marking September 2022 as the month for the Proof-of-Stake merge following recent successes of their testnet mergers.
While the Ethereum team has not explicitly stated that the merge will happen in September, they have publicly announced that mid-September is their goal for the transition following a few more testnet mergers in August.
What is Eth 2.0
The merge from Proof-of-Work to Proof-of-Stake will be one of the most significant developments on the popular blockchain network, ever. Once the blockchain is able to make the switch, transaction speeds, network congestion, and energy consumption will improve.
This will benefit the NFT ecosystem, especially because hyped-up projects tend to induce expensive gas wars during mint times. Once the merge happens, the improved TPS (transactions-per-second) will reduce bottlenecking created by sudden activity spikes from certain projects.
Effect on Eth Prices
During July, the price for Ether floated around $1,100 per coin. The majority of this dip can be attributed to multiple DeFi crashes that have been occurring since May 2022 which has caused many investors to lose confidence in decentralized banking protocols.
Now that a date has been penciled in, many investors are returning to Ethereum which appears to be on a major discount. Over the weekend, the price of Ethereum shot up from $1100 to $1450, causing many people to believe that the dip is ending.
It has been speculated that this summer dip would be the last chance for many investors to get into Ethereum before the merge happens. This is especially important because once the merge happens, mining Ethereum will no longer be possible which will cause the supply of Ether to increase at a much slower rate from validator rewards.
NFT Market Slump
Before the crypto crash which began in May 2022, the NFT market had begun to see a downward trend already happening. Public sentiment for the technology was getting worse and traders who kept losing money eventually turned away from the ecosystem altogether.
Errors in the efficiency of Ethereum were also highlighted by the major gas wars created during the Otherdeeds mint which impacted nearly everyone on the Ethereum network. As one of the most exciting metaverse projects, this failure put a spotlight on the NFT market and showed us why the merger is so important.
NFTs on Proof-of-Stake
For the NFT market to continue growing, two technical problems - gas wars and transaction speeds - need to be solved. The constant threat of losing gas fees to failed transactions is a constant risk for NFT traders, and when gas wars get high, many are left at a loss.
Fortunately, the merge to Proof-of-Stake solves both of these problems. Once validators are in control of the blocks and able to process everything faster than mining nodes, the NFT ecosystem will become a more efficient place to make exchanges; removing a key issue from the argument against NFTs.
