Ethereum Merge Narrative “Not Priced In”: Vitalik Buterin

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The Ethereum creator added that the Merge needs to “happen on a timetable” and discussed scalability developments in the ecosystem in a Bankless interview. 

Buterin Discusses the Merge 

The impact of Ethereum’s upcoming “Merge” to Proof-of-Stake will only become apparent once the upgrade ships, Vitalik Buterin has suggested. 

Speaking in an interview with Bankless co-host David Hoffman at the Ethereum Community Conference last week, Buterin said that the network’s long-awaited update could change sentiment in the crypto space. “Once the Merge happens, morale is gonna go way up,” he said, referring to those building projects within the Ethereum ecosystem. 

He also said that he thought the update was “not priced in” because it hasn’t yet launched, clarifying that he was primarily talking about confidence in Ethereum rather than the price of ETH itself. “I basically expect that the Merge is going to be kind of, not priced in, by which I mean like not even just like market terms, but even just kind of like psychological and narrative terms,” he said. 

Many Ethereum believers have predicted that the Merge could act as a potential catalyst for ETH’s price to surge, but the market-wide slump in crypto prices has meant that the asset is currently a long way from its highs. Despite rallying this month, ETH is worth about $1,620 today, still 66.8% short of its peak. 

While market interest in ETH is down from its late-2021 highs, the Merge is set to be the biggest protocol update in Ethereum’s history. It involves “merging” Ethereum’s Proof-of-Work mainnet with the Proof-of-Stake Beacon Chain, otherwise known as the execution layer and the consensus layer. Once the Merge ships, Ethereum will use Proof-of-Stake and network validators to achieve consensus rather than relying on Proof-of-Work and miners. That’s expected to bring several changes, such as greater energy efficiency and a reduction in ETH issuance because the protocol will no longer need to pay miners. 

Buterin alluded to the energy efficiency point in his Bankless interview, saying that people often misconceive Ethereum’s energy usage and how the protocol will change after the Merge. “In narrative terms I think it’s not gonna be priced in until after it happens,” he said. “Even today, a lot of people act as if this environmental issue is a fatal flaw.” Ethereum was the subject of scrutiny over its environmental impact in 2021, thanks mainly to a ban on crypto mining in China and the mainstream NFT boom. 

Scalability and Market Cycles 

During the interview, Buterin also reflected on the current state of the crypto ecosystem as the space endures a months-long downturn in the hangover from last year’s euphoria-driven bull cycle. He argued that there are benefits and costs to crypto’s cyclical nature. “[Market booms] attract a lot of people and get people excited, which is good, but they give people way too much of an impression of what the space is promising,” he said, before taking a subtle dig at bad actors and politicians. “They get attention from unsavory characters and governments that decide because it exists, it’s their business.” 

Just as he did during his presentation at EthCC, Buterin also commented on other big technological developments happening in the broader Ethereum ecosystem. Discussing Layer 2 scaling solutions, he admitted that development had lagged behind market demand. “The scalability stuff did not come fast enough for this cycle, but for the next cycle it will be,” he said, before noting that there have been promising developments with rollups and zkEVM solutions hitting the market. 

He also acknowledged the need for Ethereum to “radically change stuff,” pointing to the Merge and sharding as key upcoming protocol changes. And while he did not comment on the Merge’s planned launch date, he said that it can not be postponed forever (the update has famously suffered years-long delays and setbacks). “The Merge does actually need to happen on a timetable,” he admitted. 

Ahead of the mainnet launch, the Merge will have a final runthrough on the Goerli testnet. According to Ethereum Foundation member Tim Beiko, that’s happening sometime between August 6 and 12. The main event is tentatively scheduled for mid-September. 

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies. 

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