The Ethereum Blockchain will be updated somewhere between September 13 and September 15.
Since cryptocurrency exchanges including Binance, Coinbase, FTX, and WazirX have suspended trading of both ETH and ERC-20 tokens until the Ethereum Merge is complete, many Ethereum (ETH) holders are now unsure of what will happen to their crypto holdings.
The Merge has been in development by the Ethereum Foundation for about two years. As ETH transitions from the proof-of-work to the proof-of-stake stage, the upgrade will speed up the transactions and use 99.9% less energy.
However, some miners might continue using the proof-of-work Blockchain, which could result in a hard fork.
Then there will be a division.
“Crypto miners could mutiny over the new software upgrade and continue to mine the old proof-of-work-backed Ethereum after the hard fork chain split,” asserts Dileep Seinberg, founder and CEO of MuffinPay, a bill payment and utility firm. Even if there is currently an Ethereum Blockchain (Ethereum Classic) based on the proof-of-work consensus method, we think the possibilities of a split and the establishment of two Blockchains are modest.
What Will Happen to ERC-20 Tokens and ETH?
Investors can still access the tokens stored in hot and cold wallets even though many cryptocurrency exchanges have stopped allowing the trading of ETH and ERC-20 tokens.
Investors will acquire the same quantity of the “forked” token on the new proof-of-stake chain as they currently own on the proof-of-work chain in the event of a hard fork event following the Merge. An equal number of Ethereum tokens will subsequently be available to investors on two different Blockchains.
“The Merge event won’t have an effect on investor funds. To prevent losses due to unanticipated issues during the Merge period, investors are advised to hold off on making trades involving Ethereum, according to Sharat Chandra, vice-president of research and strategy at EarthID, a decentralised identity management business.
What Will Happen To DeFi Products Based On ETH?
Investors can choose to stake their cryptocurrency to earn interest, which locks the value for a set amount of time and offers an annual percentage yield (APY) on the cryptocurrency.
Varying exchanges give different APY and have various staking conditions.
The executive vice president of growth and strategy at CoinDCX, Minal Thukral, states: “In the event of a hard fork, staked ETH will continue to be staked. The forked token will be listed for trade through CoinDCX’s 7M listing process because it could put retail customers at risk in the short term.
Thukral continues, “Yield is definitely going to increase since ETH will stop being inflationary. This is in reference to the impact of the hard fork on the yield. This improvement represents a step toward a highly scalable ETH chain. As a result, more adoption will result in more transactions and greater real yields.
What Will Happen To NFT Products Based On ETH?
Duplication of non-fungible tokens may occur if the impending Ethereum Merge causes the Blockchain to split into two Blockchains, as happened in 2016 as a result of “THE DAO” hack (NFTs).
In any case, duplicate NFTs will exist due to the ETH proof-of-work chain and other potential forks, and there is likely to be some level of confusion regarding which assets are “official” or “authentic,” according to Amanjot Malhotra, country head of Bitay, the Turkish crypto exchange’s Indian subsidiary. Even yet, a frenzy for these copies may develop as NFT owners try to sell the proof-of-work versions of their valued tokens.
The market may experience “a wave of NFT sales on the proof-of-work chain, but if there is little social sentiment about the value of assets on the chain, then there may be little demand for them, and thus prices for duplicated assets are likely to be a fraction of the real deal when it comes to popular projects,” Malholtra continued.
What Will Happen To Gaming Products Built on ETH?
Following the Ethereum Merge, Axie Infinity, an Ethereum-based game platform, announced on Twitter that they “will support Ethereum proof-of-stake (ETHPoS).”
Additionally, they stated on Twitter that they would “stop it 24 hours before the Merge and open it once we have validated support for the Merge” in order to be safe and preserve the Ronin Bridge’s integrity (a crucial wallet protocol for the game).
Axie Infinity stated on Twitter that “Ethereum proof-of-Work (ETHPoW) would not be supported” in relation to support for the earlier proof-of-work Ethereum version. They added that those who wanted exposure to ETHPoW should “withdraw their Ronin WETH to Ethereum before the Ronin Bridge is suspended.”
In order to prevent losing access to the game and your money, make sure to ask the game developer about their position on the Ethereum Merge if you are using an Ethereum-based gaming application.