Ethereum ‘Merge’ Edging Closer as Kiln Testing Continues
The final public testnet called ‘Kiln’ has put ‘the merge’ through its paces over the past few days. This is a testbed for developers and node operators to simulate the merger of the two Ethereum chains, ETH 1.0 and the Beacon Chain proof-of-stake blockchain.
Ethereum is currently operating on a proof-of-work blockchain that requires power and resource-hungry mining hardware similar to Bitcoin (BTC). Governments and environmentalists have targeted this in their latest attempts to crack down on crypto, which is why a switch to proof-of-stake couldn’t come at a better time for Ethereum.
Instead of using energy-consuming computers to crunch numbers to validate blocks, ETH holders stake their tokens in a smart contract to validate new blocks on the chain. This drops the network’s power demands significantly, keeping the regulators at bay.
Why it Matters
Over the weekend, crypto investor and industry observer Bob Loukas commented on the narrative and increased talk about ‘the merge’ that developers have said may happen in June.
With inflation at record levels and interest rates at rock bottom, earning a yield on a deflationary asset – which Ethereum will become after the merge – has become a desirable investment for many.
According to on-chain data from Glassnode, around 320,000 ETH has left exchanges since the start of the Kiln testnet, and most of this has gone into staking.
Other industry observers took a closer look at the current state of Ethereum staking. According to the Beacon Chain explorer, there is currently 10.2 million ETH staked on the consensus layer chain. At current prices, this is worth a whopping $29 billion, which would rank it as the 8th largest cryptocurrency if that was its market capitalization.
ETH Price Outlook
Ethereum has outperformed Bitcoin over the past week, gaining 12.7% compared to BTC’s 7.8%. Ethereum prices hit a weekend high of $2,974 on Sunday but could not break resistance at the $3,000 level.
As a result, the asset has fallen back during the Monday morning Asian trading session to change hands at $2,839 at the time of writing. ETH is currently down 41.7% from its November 10 all-time high of $4,878, but the merge momentum could reverse this trend.
This article was originally posted on FX Empire