Cryptocurrency investors are eagerly awaiting Merge, the long-awaited technology upgrade for the Ethereum blockchain.
Most traders expect the event to go smoothly. However, based on a new analysis from market research firm Enigma Securities, the price of the popular Ether (ETH) derivative token, known as stETH, is experiencing some glitches. It suggests a small possibility that delays or delays may occur.
According to Enigma, the current price of stETH is a type of Ether derivative known as “stake Ether,” a token issued by the Lido protocol that allows users to trade freely even when Ethereum is staked on the Ethereum blockchain. Yes, meaning almost 6.25. %-6.5% chance of major bugs/delays in Merge.
Enigma’s pricing model treats stETH as a bond with 1 ETH of principal, yielding a 4% annual return. If the merge is successful, the investor who bought stETH will get 1.04 ETH in one year.
Enigma estimates that this price means there is only a 93.5% to 93.75% chance that the merge will go smoothly and on time, as stETH has changed hands at 0.973 ETH at the time of writing. doing. This percentage is lower than many market watchers would expect as all the dress rehearsals went well.
“The market has a lot of confidence in the merger,” Enigma Securities analyst John Freyjams told CoinDesk. , supports the view that Merge is not factored in.”
Ethereum’s move to a proof-of-stake consensus mechanism is set to fundamentally change the blockchain of the second-largest cryptocurrency by market capitalization.
Eliminates mining, reduces network energy consumption by approximately 99.95%, and turns ETH into a yielding asset. At press time, Merge plans to go live at some point in September.
“We are completely confident that it will work,” Ben Edgington, global product lead for institutional Ethereum staking service Teku at software company ConsenSys, told CoinDesk. “Every testnet he merges we’ve done and every test his scenario we’ve run over the past six months meets these criteria for a successful merge.”
Due to the hype of the merge, the blockchain’s native token, ETH, surged from around $1,000 a month ago to $2,000 over the weekend.
Rex Sokolin, head economist at ConsenSys, said: “Right now, various parties are betting as sentiment bets on whether the merger will happen. If it does, it will move us to a new regime. It will be.”
The stETH discount to Ether has also narrowed to around 3% from a low of 7% in June. In June, the token was in the middle of a liquidity crisis, with crypto hedge fund his Three Arrows Capital and crypto lender Celsius Network going bankrupt. .
According to Enigma’s Freyermuth, the current price of stETH represents an “incredibly low-risk premium packed with Merge execution risk, smart contract risk, and all systemic risks.”
Crypto Traders Downplay Impact Of Potential Fork Of Ethereum Blockchain By Proof Of Work Miners Or Airdropped ‘ETHPOW’ Or ‘ETHW’ Tokens Have Significant Value, According To Enigma doing. The logic there is that stETH discounts have shrunk, not increased, since the possibility of a fork has been swirling in the crypto industry debate over the past few weeks.
