In a few days, Ethereum will switch from the existing power-consuming proof of work consensus mechanism to proof of stake, a transition known as the Merge.
The Bank of America said in a report on Friday, investors who are prohibited from buying cryptos running on proof of work may be able to buy ETH after its transition to proof of stake consensus mechanism later this month.
Environmental aspect of crypto is one of the major reason why many institutions have not been investing in crypto, especially those running on proof of work consensus mechanism, the transition to proof of stake also known as “the Merge” is likely to open doors to institutional investors.
“The ability to stake ETH and generate a higher-quality yield (lower credit and liquidity risk) as a validator or through a staking service rather than on block-box lending/borrowing applications may also drive institutional adoption,” analysts Alkesh Shah and Andrew Moss wrote.
According to the Bank of America, a higher quality yield has ramifications for the web 3 ecosystem of decentralized applications.
Decentralized apps are applications that use blockchain technology to keep users’ data out of the organization behind it.
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Could Mainnet Merge Leads More Adoption?
The proof of work consensus mechanism is a power-consuming process with more adverse effects on the environment compared to the less power-consuming proof of stake.
With this development, the proof of stake consensus mechanism will likely facilitate more adoption of Ether due to the more environmentally friendly transition, the Merge will also change investors’ perception about Ether.
For instance, the Bank of Norway just announced its plans to build the country’s digital version of its fiat currency on the Ethereum blockchain.
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