Ethereum Merge Upgrade Will Boost Institutional Adoption – Bank of America
While Ethereum’s transition to a proof-of-stake (PoS) consensus protocol from proof-of-work (PoW), a shift referred to as the Merge, does not allay fears over the blockchain’s scalability or large transaction fees, it has ramifications that extend much further than merely serving as a forerunner to the subsequent phase of the project, the Surge, Bank of America (BAC) stated in a review published on Friday.
The Merge is the first among the five scheduled Ethereum blockchain updates, and it paves the way for the Surge.
The significant drop in energy usage following the Merge may let certain institutional level investors to acquire ether (ETH) for the initial time. Previously, these investors were prohibited from purchasing tokens that ran on blockchains employing PoW consensus protocols.
Excerpts from the article written by analysts Alkesh Shah and Andrew Moss reads as follows: “The opportunity to stake ETH and generate a better-quality income (less credit and liquidity concern) as a validator or via a staking solution as opposed to block-box financing apps may help boost institutional usage.”
According to Bank of America, a superior return has implications for the Web3 network of decentralized applications (dapps). A decentralized application is a software solution that leverages blockchain technology to protect the privacy of its users’ info.
The bank stated that a decentralized insurance mechanism like Nexus Mutual must create a profit on its reserves in order to emerge as a viable replacement for existing insurance firms. Typically, insurance firms invest their surplus reserves in corporate and government bonds, but the digital asset environment lacks products with comparable risk and return qualities. Staking via Ethereum appears to be the nearest option, according to the source.