What is Ethereum Merge?

The Ethereum Merge merges Ethereum's PoS Beacon Chain and Mainnet in order to transition the blockchain away from the unscalable proof-of-work (PoW) mechanism. On the 15th September 2022, Ethereum has successfully made the transition to a PoS mechanism. Through the merging, operations have been moved from the current Ethereum Mainnet to the new Ethereum Beacon Chain. The energy use of Ethereum will be reduced by 99.95% as a result of this merge, allowing the Ethereum ecosystem to grow even further.

Introduction

In this dashboard, we will look at the ETH swap activity over the past 60 days to determine if swap activity has increased or any noticeable difference between pre & post merge due to the fear over the possibility of a failed merge. Finally, we will also examine how has the merge affect the price of ETH.

ETH Swap Count

ETH Swap Volume (in ETH)

• The metrics above shows the ETH swap count over the past 60 days.
• As can be seen, over the past 60 days, the number of ETH swaps have been relatively consistent.
• The daily number of ETH swaps ranged between 80k to 125k.
• The normalised chart shows that there was no significant buying or selling pressure prior to the merge as each day had comparatively equal buying and selling ETH transactions.
• Furthermore, majority of the swaps were contributed by Uniswap-v2, with a total of 13.18 million or 41.4% of all ETH swaps over the past 60 days.

• The metrics above shows the ETH swap volume over the past 60 days (in ETH).

• From the daily swap volume chart, we can see that the ETH swap volume has been decreasing over time.

• Moreover, the swap volume appears to decline significantly one day before the merge. From 957.89k ETH swapped on September 13th to only 694.39k ETH swapped on September 14th, a decline of around 27.5%.

• During the same day, 56.6% of the ETH swap volume were selling ETH and 43.4% of the volume were buying ETH. Indicating that there were more users selling ETH than buying ETH one day before the merge.

• Most of the ETH swap volume occurred on Uniswap-v3 with almost half of the ETH swapped volume over the past 60 days.

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• The graph above shows the ETH price over the past 60 days.
• After 2 days of the merge, we can observe that the price of ETH has been dropping substantially from 1.56k to 1.44k, a decrease of 8.18%
• The main reason that Ethereum has dumped recently is due to the ‘buy the rumor, sell the news’ effect.
• This shows that, pricing typically increases before a huge event like the merge as a result of excitement and hype, it doesn't truly see a rise in price thereafter.

Conclusion

1. In terms of number of swaps, ETH swaps have been relatively consistent over the past 60 days and there were no noticeable increase or decrease prior to the merge.
2. However, one day prior to the merge, the ETH swap volume seemed to drop by about 27.5% when compared to a day before.
3. On top of that, ETH selling volume made up 56.6% of the ETH swap volume on September 14th, while ETH buying volume only accounts for 43.4%. Demonstrating that one day before the merge, there were more users selling ETH than buying ETH.
4. Lastly, ETH price has dropped by 8.18% after the merge. This is mainly due to the ‘buy the rumor, sell the news’ effect.

Approach

1. Table used: ethereum.core.ez_dex_swaps
2. The metrics only accounts for ETH & WETH swaps over the past 60 days.
3. Ethereum Merge occurred on the 15th of September. Hence, we will be analysing the swap activity of ETH & WETH before and after the merge.