Ethereum has switched allegiance but the revenue from the switch will reverse in 2023

  • The Ethereum merger was successful, with follow-up upgrades expected in 2023
  • Stock divestitures are expected to begin in the first quarter following improvement in OFAC compliance

the Ethereum [ETH] The mainnet’s transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) was the main reason why the second largest blockchain will come into the spotlight in 2022. Crypto. History.

However, it has not been a smooth ride all year for blockchain as investor expectations have waned. In addition, blockchain auditors need help aligning with OFAC compliance policies. But before we dive into all of this, let’s do a quick review of how Ethereum will fare in 2022.

Read Ethereum [ETH] predict the price 2023-2024

Merge: Switch is finally done

Prior to the merger, the crypto ecosystem faced many challenges which in turn negatively affected the crypto market. Exploits, deception and above all terra [LUNA] The crash caused the total market value to drop.

Therefore, due to the Ethereum merger that took place in September, the community filled their hearts with hope for stability in the sector.

On September 15, 2022, the Ethereum team announced it publicly more dangerous that the merge was successful at approximately 06:43 UTC. This was after Ethereum scored wins with Ropsten, Rikenby testnet and Bellatrix upgrades.

Although the merger helped reduce Ethereum’s energy consumption by 99.5%, it failed to help increase gas fees on the network. During the event, the Ethereum Foundation hosted a virtual merger demo party attended by esteemed co-founder Vitalik Buterin.

During the event, which was attended by thousands of people, Vitalik shared details about some of his “moving forward” plans. During the ceremony, the co-founder noted that the point-of-sale transition was just one part of a long roadmap that will lead to 2023. He noted that plans are also in place for upgrading, reducing, purging, and splurging. .

Meanwhile, the Ethereum development team has already put one foot forward in its 2023 goals. Earlier in December, it reported on the Shanghai upgrade, which pushed it towards it. Bet withdrawal process.

Despite the push, Ethereum has struggled to improve staking activities. Of course, it may still be early days, however Glassnode data He revealed that the performance in this aspect was largely unimpressive.

aAccording to Glassnode, the efficiency of staking Ethereum has been in free fall. At the time of publication, it is 0.942. The decrease indicates that only a few validators participated in publishing their validators bet ether [stETH] for work.

Source: Glassnode

Ethereum: fatigue amid optimism

As for the market performance, ETH investors were optimistic that the historic event would give some breathing room to the ailing cryptocurrency. The reason for the enthusiasm was not far off.

In the lead-up to the merger, hard forks Ethereum, Ethereum Classic [ETC]Consistently excellent performance as its hash rate is constantly increasing. According to CoinMarketCap, the ETC price rose From $14.41 to $43.53 between July and September.

It was similar to the staking protocol of Ethereum, Lido Finance [LDO]. However, ETH investors were left hanging even after that CNBC called The days leading up to the merger are the “last chance” to accumulate ETH. Days after the event, ETH value decreased By about 15%, as it led to talk about buying the rumor and selling the news.

At the time of writing, ETH changes ownership to $1,195, however, ETH may drop below the current price path until 2023. Indicators from the exponential moving average (EMA) have hinted at this possibility.

Based on the daily chart, there is a 20 EMA (blue) below the 50 EMA (yellow). This observation means that a decline in the price is likely, and a drop below $1,000 could be imminent. Bollinger Bands (BB) did not reflect the extremes according to their volatility. So since the price did not touch the upper nor lower band, ETH was neither oversold nor overbought.

ETH price movement

Source: TradingView

The second layer (L2) is to the rescue

While Ethereum struggled to achieve positive results post-merger, I like the L2 protocol control And the optimism [OP] Fill undo. During the third trimester (third trimester), I mentioned the paths Transactions on both protocols have grown exponentially.

Transactions on Arbitum increased from 39,000 in January 2022 to 115,000 in August; Optimism enjoyed a 3.5-fold rise from 41,000 to 142,000 over the same period. This growth also affected the total value locked (TVL) of L2 gems to $1 billion.

The scaling of Arbitrum and Optimism, in turn, meant that Ethereum’s scalability was fully operational. If it improves, this could lead to increased usage within the Ethereum blockchain in the next year. As with potential traction, progressive offer transactions at a cheaper cost can also attract attention.

The total value is locked to the Ethereum layer protocols

Source: Messari

Censorship still exists

Amidst the back and forth, the US Office of Foreign Assets Control (OFAC) sanctioned the decentralized protocol Ethereum, Tornado Cash. The sanctions came as allegations of apparently illegal activities using the cryptomix platform.

This was a wake-up call for an Ethereum auditor as it struggled to become OFAC compliant with the risk of censorship. Meanwhile, Ethereum-based validators have responded to the task with efforts to improve extractable mining value (MEV).

At the time of writing, the OFAC complaint block following the Ethereum merger has reached 69% over the past 30 days. to me MEV watch, only 11.14% were in the MEV enhancement area. Although they have made progress, Ethereum validators may need to do more to escape the hammer from the authorities.

Increase Ethereum MEV

Source: MEV Watch

As for its competitors, Solana [SOL] Since then it has been badly damaged FTX infectionEspecially since Sam-Bankman Fried (SBF) was famous for cryptocurrency.

Recently, active development on the Solana series has been almost non-existent. SOL has also lost about 97% of its value by 2022. Cardano [ADA]On the other hand, it has been at the forefront of development activities. But for his label, it hasn’t been a great year, just like the broader market.

As the new year approaches, what is in store for Ethereum?

As 2023 begins, Ethereum developers have announced that the community should expect more upgrades on the blockchain. According to the developers of the protocol. Tim Biko, Activating the quota withdrawal is a team priority.

He further noted that EIP-4844 would be critical in assisting auditors in the recall process. Ethereum is scheduled to start from the first quarter of 2023 and may see an increase in demand due to stake sharing.

“Blobspace is coming .oO! With Shanghai/Cabella centered around sockets, EIP-4844 will be the main focus for the subsequent upgrade.”

Additionally, the industry expects Ethereum to have a busy schedule in the coming year. However, there was no certainty that ETH would react positively to the expected development.

in a latest video On his YouTube page, cryptocurrency analyst Nicholas Merten encouraged his subscribers to avoid getting too excited about ETH in 2022. Referring to the upcoming crash, Merten said,

“The target range for Ethereum is $300 to $500. I don’t think it’s going to stay there for long, but it has something to do with the fact that there is currently a large structural treasury of over $1.5 billion worth of cum liquidations that could happen in DeFi [decentralized finance] environmental system.”

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