Ethereum: Here’s Why ETH Merge Isn’t All Rainbows and Sunshine

The merger is around the corner, and Ethereum [ETH] developers may be on cloud 9. However, there are some concerns that have found their way around the crypto market lately. However, the ETH community is increasingly skeptical of the long-awaited merger.

It’s not just sunshine out here

The issues surrounding the merger have also been discussed in a recent Altcoin Buzz YouTube video. The first issue addresses the stablecoin market as most stablecoins are locked into smart contracts on Ethereum. This poses a threat to stablecoins’ “stability”, and we know how the Luna crisis exposed stablecoins’ vulnerability.

Maker DAO even signaled the damage surrounding the merger recently. In the video, it was even claimed that major stablecoins, such as USDT and USDC, may even lose their peg due to negative funding. The merger may also lead to a perpetual reversal of the contract as futures may trade below the market spot price. There is even an increasing possibility of network outages or downtime during the transition to Proof of Stake (PoS).

The merger also poses a risk to DeFi. As mentioned earlier, Aave started a governance vote to temporarily pause ETH lending. The proposal is based on reducing the risk of high exploitation due to the ETH Proof of Work (PoW) hard fork.

The risk in the ETH market is driven by users potentially benefiting from ETHPoW by borrowing ETH before the merge. Binance also claimed that it will pause ETH and ERC-20 deposits and withdrawals during the upgrade.

Is ETH taking a hit?

Currently, ETH is struggling amid strong bearish headwinds in the market. According to Coin Market Cap, ETH is available at $1,564 after a recent selloff. But it has shown resilience in the past week with a 4.27% gain despite mild losses since September 2.

Furthermore, the community expects that a successful merger could eventually lift the price trajectory of Ethereum. It remains to be seen what the merger will bring to the table as we continue to roll under the bear market.

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