• The Ethereum merger may increase institutional interest

  • The Ethereum Merge is switching from proof-of-work (PoW) to proof-of-stake (PoS), which will have far-reaching consequences for the blockchain’s future.

    According to Brian Mosoff, CEO of Ether Capital, at the Digital Asset Summit 2022, Ethereum has matured into a system that developers want to build on.

    “There’s going to be a spectrum of activities,” Mosoff said. “There’s going to be crypto-native activities such as DeFi, NFTs, and metaverse, and then you’re going to have traditional finance — and the next five years are exciting because you’re going to see those worlds converge instead of acting in isolation from one another.”

    Even as a PoW blockchain, Ethereum has a slew of layer-2s building products on top of it, according to Kain Warwick, founder of Synthetix, a derivatives liquidity protocol.

    “Ethereum has shifted from a monolithic computational layer to a settlement layer,” Warwick said. “The shift to proof-of-stake is going to make that much more efficient.”

    Traditional financial players are likely to become more interested in Ethereum following the Merge. Mosoff believes this will be driven by the fact that Ethereum will utilize significantly less energy following the Merge.

    “A lot of funds and institutional money has an ESG [environmental, social and governance] angle,” Mosoff said at the conference. “As Ethereum becomes 99% more energy efficient…and there are ways custody has evolved and staking products will be appropriate for those institutions…you’re going to see a lot of institutions get excited about Ethereum specifically.”

    The introduction of a risk-free rate following the merger will also appeal to institutions, according to Anthony DeMartino, CEO of Matrixport.

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