Untitled BoardPOSTMR
The merge has occurred. How have users responded in days that followed? Analyze any notable trends or outliers you can see since ETH switched to POS. Compare this to user behavior in the days and weeks leading up. What major changes can you see?
The Merge
The Merge event is monumental in Ethereum’s history and perhaps even in the entire industry as a whole. It marks the first-ever transition of a large-scale network from a Proof-of-Work (PoW) consensus to Proof-of-Stake (PoS) and will drastically change issuance and operational specifics. The Merge represents the Ethereum network's shift to proof-of-stake (PoS), its new system (also called a “consensus mechanism”) for authenticating crypto transactions. The new system will replace proof-of-work (PoW), the more power-hungry mechanism pioneered by Bitcoin. Even though the Merge will happen soon (barring unforeseen circumstances), it is the result of many years of research, development, and testing. It also happens following multiple upgrades that prepare the Ethereum network for it, and this is where Bellatrix comes into play.
the Merge was scheduled to take place in the so-called “Paris” upgrade on 15th September 2022 | 11:42 A.M. EST, triggered by Terminal Total Difficulty (TTD) of 58750000000000000000000.
Methodology
In this dashboard, We are going to compare some metrics and user activity on Ethereum before and after The Merge event. Comparisons are done in both daily overtime charts and also daily average pie-charts for a better and clear understanding.
So, the main tables that we are using on this bounty are Flipside’s Ethereum Tables. Moreover, The main timespan that I am going to analyse on this table is 1.5 month before merge (1st August 2022 till 15th September) and after merge (after 15th September)
Total Ethereum Transactions and Users
Transactions Fees
First of all, we can see ETH token price situation is not good at all after The Merge update despite it was completly successfull. In the week after the much-vaunted Merge, Ether has experienced a major comedown from the hype. In a move that may skew market cap share back in Bitcoin’s favor, ETH/USD declined 25% last week. Currently trading about $1,300 and its lowest since July, the pair is seeing bearish prognoses from analysts and traders across the board.
Analysts Analysis:
“Ethereum failing to hold critical support,” Svenson warned as the weekly close failed to draw a line under the losses.
Analyst Matthew Hyland, meanwhile, gave a target of $1,000 for ETH/USD, adding that $1,250 “should hold as some support.”
There is also the grab of the $1355 low. A 4H close above $1355 would be decent for the bulls. If not, I'd be targetting $1285 next. Daan Crypto Trades
Against BTC, Ethereum was down up to 19% over the week, with Bitcoin’s share of the overall crypto market cap increasing 1.2% since Sep. 14. For well-known trader CryptoGodJohn, everything was nonetheless playing out for a “generational entry” opportunity on the pair.
Less enthusiastic was Samson Mow, CEO of Bitcoin adoption startup JAN3, who noted that while ETH/USD was still above its 200-week moving average (WMA) at current levels, Bitcoin was below its own equivalent.
Also on the left chart, we can see the success rate of Ethereum transactions did not change after Merge and this can be a good news too !
Contracts Interaction
Centralized Exchanges (CEXs) Inflow and Outlfows
During the last days before the Merge upgrade, Ethereum miners have sold over 14,785 ETH, totaling according to data from OKLink.
Whales Activity
The whales are defined as users which have more than 1000 ETH on their wallet:
Wallets ETH Balance
On the left chart, we can see wallet balance of ETH users since days before Merge till today.
The interesting thing is that number of whales (users with more than 100000 ETH balance) is increasing lightly over time and on the oppsite, the number of users who are holding less than 1 ETH is decreasing over time. So, we can conclude most users are buying more and more ETH over time and their balance is increasing over time.
Swaps on Ethereum Decentralized Exchanges (DEXs)
Non-Fungible Tokens (NFTs)
After the Merge upgrade, so many users (including me!) was interested to mint their first NFT on new Ethereum era and submit their name in the history of blockchains by performing their transactions during the first days of Merge upgrade.
To have a proof of presence in one of the most historic events of the market and the world of technology, it could be done through one of the following ways:
Receive NFTs that are created by different issuers and record this memorable event on the blockchain forever! These NFTs do not have a specific use and are mostly in memory mode, but it is recommended to get at least one and increase the user blockchain credit !
Firstly, they could start from here and click on NFT related to #consensys company.
Now that they have registered a transaction on Ethereum POS, click the second NFT .
This interest of users was so high to the extent that a user paid a whopping 36 Ethereum (~$60,000) to make history by making the first NFT in Ethereum after moving to proof-of-stake! (Below image)
AAVE Deposits and Withdrawals
ETH Derivates (stETH, rETH, aETH) peg with main ETH price
Based on the above charts, we do not see a significant change to number of transactionsd and also number ethereum users before and after merge and it can be a good news that Merge update has succesfully kept Ethereum users and also its transactions alive!
But in terms of new first-time Ethereum users, we can see their average daily number has decreased over time. but this can not be just because of Merge since market situation also has a main effect on this metric and also ETH price (and whole cryptocurrency market) has decreased dramatically during recent days. The increasing interest rate (by 0.75%) by federal reserve on Wednesday had also a negative effect on whole cryptocurrency market.
As it was obvoius and it has been said several times, The Merge upgrade had not a significant impact on transactions fees but however these numbers has been decreased lightly after merge.
Even Ethereum flawlessly executed its software upgrade, the protocol still need to address its nagging problem with transaction fees. Despite reaching a multi-year low, Ethereum’s transaction fees are still double those of Bitcoin and magnitudes more than the fees charged by competitors such as Solana. In the complex world of Ethereum upgrades, the “Surge,” which will increase the blockchain’s scalability and lower gas fees, is at times conflated with the Merge, which will make Ethereum more energy efficient but will do little to control transaction costs.
Similar to number of users, we can see almost equal number of interacted contracts by users before and after merge and The Merge did not have a significant impact on these numbers.
The top user’s destinations before and after Merge remains the same and we do not see a signifiant change or new destinations (except coinbase wallet post merge!) before and after the Merge update.
According to the above charts, we can see high activities of ETH transfers (volume) from CEXs in the last day before Merge and First day after Merge (as like as transfers TO CEXs).
Totally, we can see most of users have transfered their ETH from CEXs before Merge date, but in terms of volume, we can see most ETH volume has been transfered from CEXs after the Merge upgrade.
Considering above defination of whales, we can see whales activity has been decreased lightly after the Merge upgrade.
On the days before Merge upgrade, we can see high activity of ETH swaps (both swap to and swap from). but after the Merge upgrade, ETH swaps has decreased lightly.
On the above charts, we can see a huge spike of NFT sales on 13th September (2 days before the Merge upgrade) and this activity was the reason behind higher average NFT sales volume before merge compared to post Merge.
But, if we do not consider that high spike, the median volume of NFT sales After the Merge upgrade has increased slightly and we can see almsot higher bars on volume sales.
Bsaed on the above charts, users activity for Minting NFTs after the Merge upgrade has increased significantly in all terms (number of mints, minters and volume spent for mints)
Based on the above charts, we can see high activity of both deposits and withdraws from AAVE during the days before and after the Merge upgrade.
As we see, the average numbre of deposits and depositors and also volume of ETH deposits after post merge is more than before Merge.
The intresting thing is that the withdrawal activity after Merge upgrade is also more than Before upgrade !
the highest activity (in both term of number of actions and volume) has achieved on 15th September, the exact date when Merge upgrade has been occured.
On the above charts, I have calculated the real ETH (WETH) price and its derivates (stETH, rETH, aETH) correlation during the days and week before and after the Merge upgrade. As we see, after the Merge upgrade, the price of these derivates are getting close and closer to the ETH price.
On the right chart we can obvioulsy see ETH derivates price after Merge upgrade are getting closer to the 1:1 peg with WETH.
There was a high activity of ETH transfers to CEXs (volume) on the last day before Merge and on first day of Merge upgrade. totally, we can see average number of ETH transfers to CEXs before Merge was more than transfers after Merge . But in terms of volume, we can see more transfers of ETH to CEXs after Merge compared to Before Merge days. This can be one of the main reasons of ETH price drop!
More Useful Data
Even as the price of cryptocurrencies trade in the red, crypto exchanges are benefiting from a boost in trading activity, according to data compiled by The Block Research. As per data provided by Crypto Compare, the seven day daily moving average for crypto trading volumes has increased from $18.1 billion on September 6 to $28.6 billion on September 16.
The increase in trading activity comes amid Ethereum's Merge. On FTX.US, ETH traders accounted for a majority of the surge in volume, which encompassed close to 43% of overall exchange volume over the last 24 hours, data from CoinGecko indicates.
Likewise, ETH also led in exchange volume on Coinbase at around 34%, data shows.
According to data from whale-watching platform Whale Alert, the deep-pocketed investor transferred 100,000 ETH worth a staggering $145.62 million at time of writing from one anonymous wallet to another.
Whale Alert also finds that the tokens were moved on the morning of September 16th, just one day after the second largest crypto asset by market cap transitioned from a proof-of-work consensus mechanism to a proof-of-stake one, making the top altcoin more eco-friendly.
Other notable Ethereum transfers by high-net-worth traders on Whale Alert’s radar include:
- 50,000 ETH worth $72.12 million was transferred from crypto exchange platform Gemini to an unknown wallet.
- 35,000 ETH worth $50.87 million was transferred from an unknown wallet to an unknown wallet.
- 50,000 ETH worth $72.28 million was transferred from an unknown wallet to an unknown wallet.
- 39,450 ETH worth $56.94 million was transferred from an unknown wallet to an unknown wallet.
- 99,858 ETH worth $147.16 million was transferred from an unknown wallet to an unknown wallet.
- 109,515 ETH worth $160.51 million was transferred from an unknown wallet to an unknown wallet.
- 98,403 ETH worth $144.72 million was transferred from an unknown wallet to an unknown wallet.
The transfers come days after market intelligence firm Santiment noted that the leading smart contract platform’s network value to transaction (NVT) metric, which describes the relationship between transfer volume and market capitalization, is in its best state in 16 months.
ETH is changing hands for $1,433 at time of writing, a 5% dip during the last 24 hours and a 19.3% drop from its seven-day high of $1,777.
Ethereum Token Issuance Plummets 95% Following Merge.
Ethereum’s (ETH) annual token supply change has dropped from 3.79% to 0.20% post-merge, per data from ultrasound.money. Alongside cutting its energy use, Ethereum’s daily token issuance has also plummeted. Daily issuance refers to the total amount of new tokens created to reward a network's block miners or validators. Following the merge, the network has created 4,581.26 new Ethereum, marking a massive 95% issuance reduction compared to the deprecated PoW chain.
Under the PoW mechanism, Ethereum would’ve issued nearly 88,736.70 Ethereum.
Under EIP-1559, miners are only paid a part of the transaction fees, with the rest burned and removed from the supply. Since the EIP when live, more than 2.6 million tokens worth slightly above $8.55 billion have been burned.
Still, Ethereum remained inflationary, producing more tokens than it was destroying under the PoW mechanism. Post-merge, however, the network’s daily issuance has dropped to ~772 tokens per day compared to ~12,500 before the upgrade.
Summary and Conclusion
After the Merge upgrade:
- There was not significant increase or decrease in number of Ethereum transactions and users and the contracts that users interacted with them.
- the number of daily new users have decreased lightly (the main reason can be because of the market bearish situation not Merge upgrade.)
- There was a slight decrease in Transactions Fees, but the main reduction of these amounts will happen in the future upgrades and shards updates.
- There was high activity of both ETH inflow and outflow to/from CEXs and also platforms such as AAVE and swap programs during the days before and after the Merge upgrade.
- There was high activity of minting and also tranding on NFTs after the Merge upgrade epecially because special NFT mints events post merge.
- the ETH derivates peg with ETH price is getting closer to 1 (equal price) after the Merge upgrade.
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