Gerrit van Sittert | August 10 2022
Gerrit van Sittert | August 10 2022
Managing “The Merge” of Ethereum with Orion Protocol
For crypto traders, managing volatility is the name of the game. Users may not be seeing incredible gains it seems, but are certainly experiencing considerable bounces as the market chops at the news of broader economic forces (inflation and interest rates), crypto regulations, corporate collapses, and singular events. In these trying times, it can be tricky to ascertain which giant will rise to the fore, or collapse entirely to send shockwaves through crypto.
It’s always darkest before the dawn, as they say, but attempting to anticipate when dawn will break has the odds stacked against any trader. In light of that thought, an approaching event is building anticipation, not necessarily because the market could shift, but for the sake of the general volatility it will likely effect. The event is being referred to as “The Merge” of the Ethereum blockchain from a PoW (Proof of Work) to a PoS (Proof of Stake) consensus mechanism.
The Merge has been a long-awaited event, fraught with setbacks, that is widely accepted to have a significant lasting impact on the industry. We will touch on why that is believed to be the case, and discuss how users on Orion Protocol have access to the most advanced toolkit to manage volatility in the wake of events like “The Merge”.
The Ethereum blockchain’s shift from a PoW to a PoS consensus mechanism has been a long road, but finally seems to be rapidly approaching its goal. According to Ethereum developers, the soft deadline is September 19th, 2022. Many projected timelines have been proposed and missed, but this is the first time a calendar date has been assigned to the event. ETH rallied upon the announcement to drop the “difficulty bomb” that will mark the end of ETH mining, and initiate The Merge.
The Ethereum developers are moving the Ethereum blockchain to PoS, “because it is more secure, less energy-intensive, and better for implementing new scaling solutions”. However, concerns over energy likely carry disproportional weight. The Merge will “reduce Ethereum’s energy consumption by ~99.95%”, Ethereum devs say, which should have significant implications for crypto regulators and institutional investors. Given the “green” ESG (Environmental, Social, and corporate Governance) movement, regulators and institutions are obligated to address energy consumption before accepting ETH as an investment-worthy asset.
Disinflation is another calculated result upon execution of The Merge. Under Ethereum’s current PoW mechanism, miners are rewarded new ETH at a rate that places inflationary pressure on the total supply. This will no longer be the case once miners are eliminated and ETH is on PoS. Some say the total supply will even become delationary, but the rate of inflation will at least diminish, meaning that ETH’s price dynamics are expected to shift.
Security during volatility
As one can imagine, some are expecting ETH to rally due to The Merge, but there are also reasons to be skeptical. Maybe it will, maybe it won’t, but this kind of anticipation inevitably leads to volatility while the market evaluates new conditions.
Volatility doesn’t need to be anything to worry about, but traders risk letting their emotions lead them to make poor trading decisions, and individuals risk not having the best tools and knowledge to take advantage of opportunities. As the only DeFi solution making use of cutting-edge aggregator technology to amalgamate data and liquidity from the entire market onto one platform, Orion offers resources that any crypto trader would be disadvantaged to be without.
Deploying capital on isolated and inherently vulnerable centralized exchanges (CEXs) is also an unnecessary risk. On Orion, users can avoid network downtime from any singular exchange. Orion users also protect themselves from “fake DeFi” (CeFi) by the ability to retain ownership of their assets while they take advantage of the platform from the safety of their own non-custodial wallets. Orion’s Dedicated Proof of Broker (DPoB) consensus mechanism decentralizes access to liquidity on any exchange such that users can trade while shielding their assets and privacy.
Be prepared with Orion
Ethereum continues to be a fundamental chain supporting much of the market, so for it to shift from PoW to PoS marks a notable event in crypto, and especially DeFi. The overall dynamics of the price of ETH, and the degree to which regulators and institutions embrace it are likely to change, generating market volatility.
Crypto traders have many platforms to choose from, but only Orion provides solutions that prioritize core decentralizing values that optimize trading opportunities, privacy, and security. The Merge represents one of many happenings stirring up volatility during this bear market. For those seeking the resources to make the most of it, Orion Protocol provides the platform to do so.