According to a Bank of America research report, the Ethereum merge will lead to greater institutional adoption of ETH.
Ethereum has been the second largest crypto for several years after Bitcoin. However, the Ethereum blockchain has stumbled with increasing problems such as rising gas fees, slow transaction speeds and poor scalability. These are the reasons why the Ethereum merge is happening.
The Ethereum Merge represents the transformation of the consensus mechanism for transaction validation in the Ethereum network from Proof-of-Work (PoW) to Proof-of-Stake (PoS). The Ethereum Blockchain should run faster and more efficiently after this merge. The scalability of Ethereum and the efficiency of its smart contracts should be massively improved.
However, on its blog, the Euthereum Foundation has already given real-time indications of the contours of this transition that should take place soon.
The foundation has clarified the “gas” fees and explained:
“The Merge deprecates the use of proof-of-work, moving to proof-of-stake for consensus, but does not significantly change the parameters that directly influence network capacity or throughput.
Ethereum merge opens up entry for many institutions
But while this merge doesn’t address concerns about the blockchain’s scalability or high transaction fees, it does have implications beyond simply serving as a precursor to the next step in the process, the Surge, Bank of America (BAC) said in a research report Friday.
According to BAC, investors who are not allowed to buy PoW-based cryptocurrencies may be able to buy ETH after the Ethereum blockchain transition.
The environmental aspects of crypto are a major obstacle for many institutions. Therefore, the removal of Ethereum’s mining requirements opens the door for many institutions to enter the asset.
According to BAC analysts, institutional adoption may also be influenced by the ability to stake ETH and provide higher quality performance as a validator, or through a staking service.
In addition, Bank of America also states that higher quality performance also has ramifications for the Web3 ecosystem of decentralized applications (dapps).