Ethereum will define web3's 'benchmark interest rate' post-merge, according to Raoul Pal

Episode 66 of Season 4 of The Scoop was recorded remotely with The Block's Frank Chaparro and Raoul Pal, co-founder and CEO of Real Vision.

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Last time Real Vision CEO Raoul Pal came on The Scoop podcast back in 2020, the investment strategist cautioned that the Federal Reserve's monetary policy was simply “papering up the cracks” in the economic crunch caused by Covid-19.

Over two years later, Pal’s predictions seem to have come true, as the global economy struggles to keep pace with rampant inflation, which reached a 40-year high of 9.1% in the US in June.

Although the crypto markets have been hit especially hard in recent months, Pal feels “that the forced selling participants are out of the market,” adding that “we’re definitely close to the low.”

In this episode of The Scoop, Pal forecasts where he believes the economy is headed in the coming months, and shares why Ethereum’s upcoming merge could represent a defining moment for the web3 industry.

After Ethereum’s merge to a proof-of-stake consensus mechanism, users who "stake" ether to secure the network will earn yield in ether — something Pal thinks will have a standardizing effect on the inflation rate of protocols around the industry:

“We are going to end up creating a benchmark web3 interest rate of which we can assess other risks against, so that makes risk management slightly more transparent.”

For example, Pal hypothesizes that if Ethereum offered 4.8% yield after its upcoming merge, then 4.8% would become the benchmark yield for other crypto projects as well. Furthermore, the risk from investing in protocols offering yields higher than Ethereum’s could be assessed relative to Ethereum's hypothetical risk-free 4.8% yield.

In addition to creating a benchmark yield for the industry, Pal thinks the decrease in the Ethereum blockchain’s energy consumption after the merge could result in it becoming an institutional favorite compared to the more energy-intensive, proof-of-work consensus mechanism used by the Bitcoin blockchain. As Pal explains:

“To have a benchmark yield in the second largest cryptocurrency, when everybody wants to allocate over time to web3 as a theme, that is not counter to the 'FUD' of the ESG narrative that Bitcoin has to battle with — it becomes incredibly attractive for institutions to allocate.”

Additionally, Pal claims he has personally been adding the most crypto to his portfolio since November of 2020, stating “the risk-reward is now becoming super ludicrous, so it dwarfs anything else.”

During this episode, Chaparro and Pal also discuss

  • When inflation might peak, and what comes next
  • Whether or not we will see continued strength in the US dollar
  • If stagflation is a legitimate concern in the coming months

This episode is brought to you by our sponsors Chainalysis & IWC Schaffhausen

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IWC Schaffhausen is a Swiss luxury watch manufacturer based in Schaffhausen, Switzerland. Known for its unique engineering approach to watchmaking, IWC combines the best of human craftsmanship and creativity with cutting-edge technology and processes. With collections like the Portugieser and the Pilot’s Watches, the brand covers the whole spectrum from elegant timepieces to sports watches. For more information, visit

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