Ethereum 'Merge' approaches as Kiln's tests continue

The final public testnet called "Kiln" has been testing "the merge" in the last few days. This is a testbed for developers and node operators to simulate the merger of the two Ethereum chains, ETH 1.0 and the proof-of-stake Beacon Chain blockchain.

Ethereum is currently operating on a proof-of-work blockchain that requires power and resource-hungry mining hardware similar to Bitcoin (BTC). Governments and environmentalists have targeted this aspect in their latest attempts to crack down on cryptocurrencies, which is why the move to proof-of-stake couldn't come at a better time for Ethereum.

Instead of using power-consuming computers to calculate numbers to validate blocks, ETH holders stake their tokens in a smart contract to validate new blocks in the chain. This significantly reduces the energy demands of the grid, keeping regulators at bay.

Because it is important

Over the weekend, cryptocurrency investor and industry observer Bob Loukas commented on the narrative and the rise in "merger" talk that developers said could take place in June.

With inflation at record highs and interest rates at their lowest, earning a return on a deflationary asset - which Ethereum will become after the merger - has become a desirable investment for many.

I see the $ ETH2 merger talk has begun. This should start to gain momentum.

Furthermore, the market has not come close to pricing how incredible a 5% return is on a hard money asset that issues at the protocol level and not at the third party level.

- Bob Loukas (@BobLoukas) March 19, 2022

According to Glassnode's on-chain data, around 320.000 ETH have left the exchanges since the Kiln testnet began, and most of these have gone into staking.

Other industry observers have taken a closer look at the current state of the staking of Ethereum. According to the Beacon Chain explorer, there are currently 10,2 million ETH staked on the consensus level chain. At current prices, this is worth a whopping $ 29 billion, which would make it the eighth largest cryptocurrency if that were its market cap.

ETH price outlook

Ethereum overtook Bitcoin in the past week, gaining 12,7% compared to BTC's 7,8%. Ethereum prices reached a weekend high of $ 2.974 on Sunday, but failed to break through the resistance at the $ 3.000 level.

As a result, the asset fell during the Asian trading session on Monday morning to change hands to one quotation of $ 2.839 at the time of writing. ETH is currently down 41,7% from its Nov 10 all-time high of $ 4.878, but merger momentum could reverse this trend.