Ethereum, the second-largest cryptocurrency after bitcoin, has led the broader crypto price rally this month as excitement builds ahead of its much-hyped upgrade.
The ethereum price, having dipped below $1,000 per ether in June, has rocketed around 70% to over $1,7000—fueling a crypto price boom that’s helped bitcoin climb convincingly over $20,000, and further supported by rising expectations of a “sharp” Federal Reserve u-turn.
Now, ethereum cofounder and the project’s spiritual leader Vitalik Buterin has said he still doesn’t think ethereum’s long-awaited merge upgrade is fully “priced in”—predicting that “once the merge happens, morale is gonna go way up.”
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“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,” Buterin told the host of the Youtube show Bankless David Hoffman at the Ethereum Community Conference last week, referring both to ethereum developer confidence as well as the ethereum price.
Despite the recent ethereum price rally, ether remains down by around 60% from its all-time high of almost $5,000 set late last year. The bitcoin price has also crashed a similar amount from its peak.
Ethereum’s radical merge upgrade, penciled in for mid-September, will see the network switch away from bitcoin’s proof-of-work consensus mechanism to the more power-efficient proof-of-stake, allowing ethereum holders to “stake” their ether to secure the network in return for freshly-minted coins. Ethereum rivals such as Binance’s BNB, solana and cardano all use proof-of-stake or some variant of it.
The switch to proof-of-stake will make the ethereum network 99% more environmentally friendly, according to the Ethereum Foundation.
Meanwhile, it’s been predicted staking will have a deflationary effect on the ethereum as people lock up their coins, suppressing supply as demand increases. Ethereum began to become deflationary last year, with more coins being “burnt” than were distributed to so-called miners who verify transactions on the blockchain.
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Last week, Buterin revealed his plans for ethereum following the “merge” upgrade—with the “surge” next in a series of improvements designed to make the network more secure and decentralized.
Speaking at the Ethereum Community Conference, Buterin said ethereum will further change its monetary policy following the merge upgrade, with the annual issuance of its ether expected to be cut by as much as 90%.
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“[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,” Buterin told Bankless.