Illustration by Mitchell Preffer for Decrypt
It was merge week. Ethereum’s long-awaited overhaul was finalized without a hitch, but there was no sudden influx of capital, either. Ethereum’s price actually fell 8% to below $1,500 on Thursday, the day of the merge. At the time of writing it trades for $1,376, about 22% cheaper than it was last Sunday.
A day before the merge, Ethereum’s co-founder Vitalik Buterin shared a graph from etherchain.org showing the network’s hash rate has maintained consistency, despite negative predictions from certain forecasters.
Looks like the «hashrate will drop weeks before the merge due to miners rushing to sell ahead of everyone else» thesis has been proven completely false.
I’m a bit surprised! I argued against a 50% drop but definitely expected like 5-10%. pic.twitter.com/l9OpT8fPFl
— vitalik.eth (@VitalikButerin) September 14, 2022
The following day, Thursday, Buterin broke the news that the network’s transition to proof-of-stake (PoS) was complete:
And we finalized!
Happy merge all. This is a big moment for the Ethereum ecosystem. Everyone who helped make the merge happen should feel very proud today.
— vitalik.eth (@VitalikButerin) September 15, 2022
Beeple, the digital artist whose NFT collection “EVERYDAYS: THE FIRST 5000 DAYS” sold for an unprecedented $69.3 million through a Christie’s auction, ushered in the new era with a purple vision of Ethereum mining in the future:
THE MERGE pic.twitter.com/7tdfNZiuuv
— beeple (@beeple) September 15, 2022
A blockchain developer named Miguel Piedrafita said that after the merge, Ethereum was 99.95% more energy efficient, becoming vastly greener than a typical tech company.
ETHEREUM JUST REDUCED ITS ENERGY USAGE BY ~99.95%
It’s now using up way less energy than YouTube, Netflix, and pretty much every other big tech company.
WELCOME TO SOLARPUNK WEB3
(source: https://t.co/5Ghh3F3Ycz) pic.twitter.com/Bv60K9UgYG
— Miguel Piedrafita 🐼 (@m1guelpf) September 15, 2022
The upgrade even slightly outdid Ethereum’s energy projections. A report released on the day from the Crypto Carbon Ratings Institute (CCRI), commissioned by Ethereum-centric software firm ConsenSys, claims that Ethereum now uses approximately 99.99% less energy post-merge.
Former Ethereum co-founder Charles Hoskinson, who now heads competitor Cardano—which has a market cap of $16.4 billion—was feeling salty. He posted a meme likening the merge to a nightmare. When someone tweeted him asking where Cardano’s technology stands in relation to Ethereum, Hoskinson let rip with some flagrant self-promotion:
About three years ahead on research, two on engineering. They will one day figure out that slashing is a really really bad idea
— Charles Hoskinson (@IOHK_Charles) September 15, 2022
Crypto market intelligence firm Santiment sounded a note of caution over how centralized Ethereum staking had become after the merge.
📊 According to our #Ethereum Post Merge Inflation dashboard, 46.15% of the #proofofstake nodes for storing data, processing transactions, and adding new #blockchain blocks can be attributed to just two addresses. This heavy dominance by these addresses is something to watch. pic.twitter.com/KQdFNgGloD
— Santiment (@santimentfeed) September 15, 2022
This was a common complaint. According to Martin Köppelmann, co-founder of DeFi platform Gnosis, popular crypto exchage Coinbase and liquidity staking pool Lido Finance together account for 42% of post-merge Ethereum validators, and the top seven entities control more than two thirds of the stake validating transactions. Köppelmann also ran a poll in which three quarters of 15,885 respondents agreed that Coinbase and Lido’s staking dominance “needs to change.”
top 7 entities controlling >2/3 of the stake is pretty disappointing to see tbh pic.twitter.com/VBipyFUM7g
— Martin Köppelmann 🇺🇦 (@koeppelmann) September 15, 2022
Alex Svanevik, the CEO of crypto analytics company Nansen, noted a sudden huge influx of Ethereum into exchanges.
Huge inflow to exchanges coming from:
1) Nexo: 450,000 ETH to Binance.
2) Multisig owner: 288,442 ETH to Bitfinex.
That’s $1.2B in two transactions 👀 pic.twitter.com/UMOAh0mXmK
— Alex Svanevik 🐧 (@ASvanevik) September 15, 2022
Finally Daniel Buchner, a technical product lead at Microsoft’s Decentralized Identity initiative, likened the merge to Groundhog Day:
Feeling some déjà vu, help me out: today folks are celebrating an ‘introduction’ of PoS, a consensus system known for 20 years we’ve long had examples of, which has numerous flaws cypherpunks carefully avoided in developing PoW. Why is this being advertised as new or innovative? pic.twitter.com/Ir0EJCQfnX
— Daniel Ƀrrr (@csuwildcat) September 15, 2022
It was also a big week for MicroStrategy’s former CEO and current executive chairman Michael Saylor. It wasn’t so much what he said, but what people were saying about him. On Tuesday, Bitcoin enthusiast Udi Wertheimer trolled his 114.3k followers with believable fake news.
BREAKING: MICROSTRATEGY HAS PURCHASED AN ADDITIONAL 1,143 BTC AT AN AVERAGE PRICE OF $22,958 USD
— Udi Wertheimer (@udiWertheimer) September 13, 2022
Fake or not, it would be wrong to say that Saylor isn’t considering swelling Microstrategy’s 129,699 Bitcoin war chest (worth $2.6 billion at today’s price). Last week, an SEC filing revealed that MicroStrategy has entered an agreement with investment bank Cowen & Co. to sell up to $500 million in shares of its Class A common stock. It may use the proceeds to buy more Bitcoin.
On Friday, the White House released new guidance on crypto. Billed as a “First-Ever Comprehensive Framework for Responsible Development of Digital Assets,” the new guidance uses the recommendations and conclusions of various government agencies after six months of studying the crypto industry.
Saylor shared a lengthy article by crypto investor Nic Carter denouncing the crypto mining climate study done by the White House Office of Science and Technology Policy (OSTP). Carter claims the main weaknesses of the study were unreliable sources, a lack of perspectives from industry experts, and no novel data.
The latest White House Crypto Climate & Energy Report is full of misinformation generated and promulgated by unscrupulous crypto promoters in order to undermine #Bitcoin and champion their own interests. @nic__carter expertly debunks the propaganda.https://t.co/kW7sictekQ
— Michael Saylor⚡️ (@saylor) September 16, 2022
Still, Saylor doesn’t represent everyone, according to “independent Ethereum educator” Anthony Sassano.
Saylor is not a good flag bearer for this industry
He is an absolute embarrassment
— sassal.eth 🦇🔊 (@sassal0x) September 16, 2022
Finally, Terra CEO Do Kwon broke his silence on Saturday after headlines emerged earlier in the week saying that a South Korean court had issued an arrest warrant for him for violating capital market rules. The Korean Ministry of Finance also announced that it was seeking to void his passport. He told followers he’s not on the lam.
We are in the process of defending ourselves in multiple jurisdictions — we have held ourselves to an extremely high bar of integrity, and look forward to clarifying the truth over the next few months
— Do Kwon 🌕 (@stablekwon) September 17, 2022