The Merge is Coming: What Does it Mean for You and Diamond?
The market has rallied in the past few weeks because of The Merge. Miners, bots, and experienced traders all have their eyes on The Merge and will try to make a profit. In this article, we will explain what The Merge means to retail investors, DeFi users, and Diamond’s users.
The Merge will happen when the TTD (Terminal Total Difficulty) reaches 58750000000000000000000. This means the current Ethereum PoW network has only a fixed number of hashes left to mine.
After the TTD reaches that level, the merge will happen, and Ethereum will transition to PoS officially. In the meantime, supporters of the current Ethereum PoW network will hard fork the chain at the latest block before the merge. There will be two chains afterward, Ethereum PoS and Ethereum PoW.
What Happens to Your ETH and NFTs?
All the coins and NFTs you hold before the merge will also be forked in Ethereum PoW. Users who hold their ETH in their Metamask will be airdropped the same amount of ETH in Ethereum PoW, and if you are a #BAYC holder, you will now have two apes, one on Ethereum PoW and the other on Ethereum PoS. In short, every on-chain asset will get duplicated.
For major exchanges like Binance and FTX, it’s still uncertain whether users will get the ETHW (ETH on Ethereum PoW) airdrop if they hold their ETH in these centralized exchanges. In Binance’s announcement in late August, they stated that the forked token (i.e., ETHW) would have to go through all their listing review process before going live on Binance. If you want to get airdropped, it will be wiser to put their ETH in hot wallets before the merge.
If you are looking for ways to maximize the ETHW airdrop opportunity, check this must-read thread by Bobby Ong. He shared some great alphas about how to get the most out of the ETHW airdrop, including:
- Hold ETH in a hardware wallet
- Bridge tokens back to mainnet from L2
- Unwrap all WETH for ETH
- Borrow ETH from lending protocols (Note: Aave has stopped loaning ETH to keep the protocol safe)
- Remove all liquidity from DeFi protocols
- Buy stETH when it’s cheap
- Buy ETHW now and sell the news
For ETH holders who just want to safely transition to Ethereum PoS, just relax and chill. You don’t need to do anything additional to waiting a little longer.
Why Would Someone Want to Fork the Chain in the First Place?
Well, most of them are likely miners who have benefited from the PoW mechanism and want to extract the last juice of the network. It is predictable that after the chain comes out, we will see people talking about the benefits of Ethereum PoW, but as rational investors, we should always take a step back and see the bigger picture:
As every asset is duplicated, assets on one chain will be worth nothing eventually. What will happen next is that as ETHW is likely the only asset on Ethereum PoW that will be supported by CEXs (Most CEXs will eventually support ETHW because trading volume = 💵), users will sell everything on Ethereum PoW for ETHW. Therefore, there will be a short pump for ETHW before it gets dumped on different markets.
Also, as DeFi protocol (Aave), oracles (Chainlink), NFT marketplace (OpenSea), and many infras have stated that they will only support Ethereum PoS after the merge. Chances are these Dapps that have brought most of the users into the crypto world will live only in Ethereum PoS, and there will be almost no application with real users on Ethereum PoW.
Viewing from history, almost all forked chains are dead because they do not have enough use cases and have no incentive to build their community and infrastructures. This time is no different.
How Will Diamond Users Experience The Merge?
As for Diamond, we expect the impact of the merge on Diamond Protocol to be minimal, and users can still enjoy the seamless experience of creating strategies on our platform after the merge.
So far, we’ve built structured products on Ethereum and Optimism, and our latest product UniBot has entered the closed beta phase for two weeks on Arbitrum. For Optimism, the Optimism team has written a great thread about the impact of the merge on Optimism:
For Arbitrum, there will be no downtime when the merge happens, either. Further, The latest upgrade, Nitro, has greatly increased its throughput and makes transaction fees a lot cheaper!
Overall, We have our eyes on building products on mainly Ethereum & L2 ecosystem, and we think that the future of it has never looked so bright! We believe the merge will mark a new milestone for the Ethereum ecosystem. We are excited about this transition and can’t wait to see what the post-merge DeFi landscape will look like! Feel free to share your thoughts about #TheMerge with us!
