The report said that when demand is high, the new economic model under Merge, along with token burn, could lead to negative token emissions.
Bernstein said in a research report that the Ethereum Foundation’s successful completion of the Merge early Thursday morning is likely to lead to strong institutional adoption of the blockchain’s token, ether.
Bernstein said that the blockchain will “emerge as a category leader in digital assets, given its economic transition, scalability roadmap, and the thriving digital economy that is being built on it.” It also thinks that ether (ETH) will be widely used by institutions because it has the most market share, market capitalization, and liquidity.
The first block to be validated by the proof-of-stake (POS) system was #15537394, and tips of about 45 ether (ETH) were given, according to a report. Bernstein said that about 95% of validators took part in the change, and that the “chain reached finality” within minutes of the change.
The Merge is the first of five planned upgrades for the Ethereum blockchain. It involved switching from a proof-of-work (PoW) consensus mechanism to a more energy-efficient proof-of-stake (PoS) consensus mechanism.
Bernstein said that after the change, graphics processing unit (GPU) mining networks will be useless and may be used for Ethereum forks, Ethereum Classic, or the gaming industry.
Analysts Gautam Chhugani and Manas Agrawal wrote that the successful Merge is the result of years of planning and is a major step in the Foundation’s plan to “make Ethereum the world’s largest decentralized supercomputing network.”
The note said that from an investment point of view, Ethereum’s token emissions will drop by about 90%, the network’s energy use will drop by about 99%, and ETH holders can now earn a staking yield.
When demand is high, the new economic model created by the Merge and the token burn may lead to “negative token emissions.” This limits the total amount of ether available and creates “digital scarcity,” the note said.
