Metamask's Parent Company Reports On The Effect The Ethereum Merge Could Have On Institutions: What's Next?

ConsenSys released this week a report titled “The Impact of The Merge On Institutions.” ConsenSys is the leading Ethereum software company and creator of the Metamask wallet.

What Happened: The report gave an in-depth analysis of the dominance that Ethereum has held over other blockchains in network participation, fees, protocol revenue, TVL, DeFii activity and more.

With the merge from proof-of-work to proof-of-stake scheduled for mid-September, ConsenSys made the case that Ethereum’s lead among layer 1 blockchains will only grow. The merge should make the Ethereum network 99.95% more energy efficient and 10 to 20 times more secure.

On top of network improvements, the cryptocurrency could become deflationary, which may lead to a rise in price.

The report also found institutional staking of Ethereum had become very popular, with more than 13.3 million Ethereum staked a month before the merge.

Institutions were also notably diversifying into crypto through yield farming, lending and borrowing, digital asset trading and collateralizing NFTs.

Why It’s Important: The decrease in energy usage due to the removal of proof-of-work is great for the Ethereum narrative. It grants institutions who were unable to invest in Ethereum due to ESG mandates the option to now invest. Also, staking opportunities could become an attractive move for institutions, with real yield expected to be between 5.5% and 13.2%.

See Also: The Ethereum Merge, Explained

ConsenSys stated that the increased security is likely to be leveraged by layer 2s, bringing more value and DeFi applications to the Ethereum blockchain.

The Merge is by no means the end of the Ethereum roadmap. Once Ethereum successfully merges to proof-of-stake, it will begin to focus on making the blockchain more cost-effective in a process called sharding, which could reduce gas fees significantly for network users.

Photo: 4K_HEAVEN via Shutterstock