Despite multiple delays, core developers have made major progress and Ethereum co-founder Vitalik Buterin has said the upgrade is set to take place in August. The Merge will shift the Ethereum blockchain from a proof-of-work consensus mechanism, where miners use powerful computers to order and validate transactions for users, to proof-of-stake. The new mechanism replaces miners with Ether holders performing the same tasks.
Decentralized-finance investors are betting on Ethereum’s revamp to help thaw out the market’s more than two-months-long crypto winter.
The DeFi sector, where investors earn yields by trading and staking cryptocurrencies without centralized intermediaries, has declined sharply following the collapse of the TerraUSD stablecoin, and as soaring inflation puts the Federal Reserve on a path of monetary tightening. The Ethereum “Merge,” one of the most significant technical upgrades to the blockchain since its inception in 2015, may be one of the few catalysts that could give DeFi a much-needed lift.
