Original Source: veDAO
The crypto world evolves at such breakneck speed that Ethereum's Merge already feels like distant history. Yet, the network's full transition to Proof-of-Stake (PoS) officially marks just one year. Price-wise, Ethereum trades at levels similar to September 2022 — hovering around $1,600 pre-Merge. But this barely scratches the surface. Substantive changes have rippled through Ethereum's ecosystem since its historic shift. In this analysis, veDAO Research Institute catalogs these transformations.
Energy Efficiency Revolution
Pre-Merge, Ethereum relied on Bitcoin's consensus blueprint: energy-guzzling Proof-of-Work (PoW). Miners competed to solve complex equations, consuming massive electricity for block rewards. The PoS pivot replaced miners with validators who stake ETH to secure the network. The environmental impact? Staggering.
A Crypto Carbon Ratings Institute (CCRI) report reveals:
- 99.99% reduction in energy use
- 99.99% smaller carbon footprint
Mainstream media often vilified crypto's ecological toll, with ESG concerns dampening institutional adoption. Ethereum's Merge effectively silenced these critiques, removing a major adoption barrier.
The Liquid Staking Boom
Post-Merge staking activity skyrocketed:
- 22.44% of total ETH supply now staked (~26.96M ETH)
- Nearly double pre-Merge staking volumes (Dune Analytics data)
Yet decentralization concerns persist. While platforms like Lido Finance (32.3% staking share) offer alternatives to centralized exchanges, their dominance raises new questions about single-point vulnerabilities.
Liquid staking tokens dominate DeFi:
- stETH leads at $13.8B market cap
- rETH follows at $912M
This innovation lets users earn staking rewards while retaining asset liquidity — fueling DeFi's expansion despite broader market contractions.
Scaling Solutions Surge
The Merge wasn't designed to boost transaction speed (remaining at ~10 TPS). Instead, it laid groundwork for future upgrades like:
- Proto-danksharding (part of upcoming Dencun upgrade)
- L2 networks now processing 50+ TPS collectively (per L2Beat)
- Major L2s (zkSync Era, Optimism, Arbitrum Nova) handling 2x Ethereum's transaction volume
Vitalik Buterin's "Surge" roadmap anticipates eventual 100,000+ TPS capacity, with recent developments like stateless clients potentially enabling smartphone node operations.
Regulatory Crossfire
Staking drew SEC scrutiny:
- Kraken's $30M settlement over unregistered securities
- Ongoing cases against Coinbase and Binance staking products
- Regulatory ambiguity: CFTC calls ETH a commodity, while SEC avoids definitive classification
This jurisdictional tug-of-war leaves ecosystem participants navigating uncertain compliance landscapes.
Road Ahead: Dencun & Beyond
Core developers are advancing:
- Account abstraction (wallet UX simplification)
- Stateless clients (mobile node compatibility)
- Full danksharding implementation
While the Merge might seem a footnote compared to 2022's market chaos, it established critical infrastructure for Ethereum's next evolution — proving gradual, values-aligned progress remains possible.
FAQs
Q: Did the Merge reduce Ethereum's gas fees?
A: No. The Merge focused on consensus mechanism change, not scalability. Fee reductions require Layer 2 solutions or future upgrades like danksharding.
Q: What's the risk of Lido's staking dominance?
A: If Lido controls >33% of staked ETH, it could theoretically influence chain finality — though governance mechanisms aim to prevent this.
Q: How does staking differ post-Merge?
A: Validators replaced miners. Instead of hardware competition, stakeholders "vote" with deposited ETH to validate transactions.
Q: When will Dencun upgrade launch?
A: Expected Q4 2023/Q1 2024, pending testnet deployments and security audits.
Q: Can the SEC really classify ETH as a security?
A: Legally contentious. Most industry players argue ETH's decentralized nature makes it a commodity like Bitcoin.