The tokens discussed in this article are being used as a case study for educational purposes showcased by DexGuru.
Ethereum lovers, users and followers now have a date for the beacon chain merge (somewhat). The merge will take place once the total terminal difficulty reaches 58750000000000000000000, which according to Vitalik, will be around Sept.15, 2022. After many years of discussion, Ethereum will finally be transitioning from Proof of Work to Proof of Stake - dropping energy usage for the blockchain and reducing issuance. With a significant change on the horizon, traders are wondering how to gain exposure to this monumental event in crypto history. Let's dive into some assets that have exposure to the merge.
Rocket Pool (RPL)
Rocket Pool is a decentralized Ethereum 2.0 staking pool. With Rocket Pool, node operators can stake as little as 16 ETH and receive the remaining 16 ETH to stake from rETH holders. This model helps node operators earn more yield on their ETH and enables the public to take part in staking without needing to operate a node.
Using the DexGuru trading terminal, we can see that Rocket Pool's native token, RPL, is trading at around $25 (at the time of writing), with a recent low in June at $7.69. With a maximum circulating supply of 18,686,472 tokens - RPL is resting at a fully diluted valuation of $482 million. As we can see, the price movement has been green heading into the merge, and it will be great to observe whether these trends continue or we see a reversal once ETH staking is live and earning yield!
Lido Finance (LDO)
Like Rocket Pool, Lido Finance lets users earn yield off their ETH by staking it for their yield generating token, stETH. Lido currently has 4.2M ETH staked from the DeFi community, which includes almost 100k unique stakers! Lido has quickly become a DeFi staple, with many in the DeFi community waiting patiently for the merge to unlock stETH rewards.
Looking through the lens of DexGuru, we can see that LDO is trading at $2.5 at the time of writing, with a fully diluted valuation of $2.5 billion! With price action being an inconsistent trend of highs and lows, let's look into how the whales are trading LDO heading into the merge.
Currently, 56% of LDO holders are in the money with their investment. While looking at the top 100 holders of LDO token, we can see a recent sell-off by the asset's 4th and 7th largest holders. Fortunately for LDO holders, most of the top 100 are not buying or selling right now and instead are holding their bags leading into the merge.
Of course, there is one asset that has the most exposure to the merge, ETH! The merge is the single most significant event in Ethereum's history, and its success greatly affects ETH as an asset for many reasons.
- A successful merge displays competency in the Ethereum community. Transitioning a blockchain from PoW to PoS is no walk in the park, and if Ethereum can make the switch successfully, price action could trend upwards. Unfortunately for ETH holders, if the merge is delayed or unsuccessful, ETH could fall.
- Proof of Stake reduces issuance for Ethereum. Currently, there are 120M Ether in existence, with an extra 5.5M ETH issuance every year. Although we can not be sure of the issuance post-merge, many believe we could see negative issuance and, at the very least, a drastic reduction in ETH inflation.
- The Ethereum PoW fork. A select community on Ethereum is planning on forking the PoS Ethereum and maintaining the PoW blockchain. This fork would result in ETH holders receiving a 1:1 payout of ETHW for each ETH they have in their wallets. Poloniex offers perpetual markets for the ETHW/ETH pair, currently trading around 0.03. For ETH holders, this could mean a 3% increase in value from their ETH holdings.
DexGuru is a trading terminal made for traders in the DeFi era, leveraging on-chain analytics combined with token swap execution capabilities. This analysis was done solely with the tools available in the DexGuru trading terminal. With a recently launched DAO in the bootstrap phase, they are decentralizing data and the project itself.
This post is commissioned by DexGuru and does not serve as a testimonial or endorsement by The Block. This post is for informational purposes only and should not be relied upon as a basis for investment, tax, legal or other advice. You should conduct your own research and consult independent counsel and advisors on the matters discussed within this post. Past performance of any asset is not indicative of future results.
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