What is the Merge really about? Follow the Money…
September 28th, 2022

Despite much media commentary to the contrary, the biggest impact of the Ethereum merge is not a faster or cheaper blockchain. While these outcomes are interesting from a technological perspective, none of them - whether they happen or not - will have near the impact of how money will flow differently post merge. Spoiler alert, the money is coming to you if you know where to look.

There is much hype surrounding Ethereum moving from proof of work (POW) to proof of stake (POS). The main difference is that in proof of work, the blockchain is validated through energy use (i.e. a computer doing calculations to secure the blockchain) vs in proof of stake where it is secured by capital. I.e. in proof of stake someone is willing to put up some amount of ETH to guarantee their validations are correct (at the risk that this money is slashed if the validation is incorrect or fraudulent).

Ready for the most important part of the merge? In POW, MEV (Miner Extracted Value) (aka the money) went to the people who had powerful machines working to secure the blockchain who received new coins in exchange. With POS, since we don’t need to rely on miners, this MEV can go elsewhere, particularly to the proposers and builders, aka the “new miners”. This shift in value extractions is the most overlooked benefit of the merge.

Many of the people at the proposer/builder level (the new miners) will share that money with people who are willing to put up some smaller amount of money (ETH) so proposer builders can use it to validate transactions. Where do they get all that ETH? That’s where you come in. Proposer builders willing to pay you to use your ETH! This is where sETH products like sETH stETH etc. stem from. They are basically someone’s token that represents staked ETH through their system. An example of this is cbETH from Coinbase. When you stake your ETH with Coinbase, you receive cbETH and the ‘new miners’ use your Eth to validate transactions, allowing you (with zero effort) to access core rewards from the Ethereum translation network.

Tapping into these core transactions is like tapping into the Visa network and getting a piece of every credit card swipe. Interested? Well it gets better and a bit more complicated. Stacking refers to a concept that was done by degens in ETH 1 but now could be available to pretty much anyone. So, stake ETH→ETH2 then take the sETH and deposit it elsewhere and stack the return. This can theoretically be performed in an infinite chain such as ETH-ETH2->sETH->SOMETHING->sSOMETHING->.

Let’s do some simple math on this chain. If SOMETHING returns 5%, you would receive 10% for sETH on top of SOMETHING locked up for a year and you get...15% and that's just one level of stacking. Sounds too good to be true? Just watch the post-merge money to see this in action. It’s going to be a fascinating post-merge world but you only have to remember two things

  1. You can earn money from transactions that happen on Ethereum, where before only miners could.

  2. if you are willing to take more risk you can try stacking in order to make more money.

Interested in learning more about a protocol that gives consumers access to the same financial products banks, governments and institutions use to preserve and grow wealth? Check out homecoin.finance to get HOME in your wallet today.

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