In this article, we will look at the 10 cryptocurrencies Redditors are buying after the Merge. If you want to skip our detailed discussion of the Merge and its possible benefits and risks, you can go directly to Redditors are Buying These 5 Cryptocurrencies After the Merge.
The Merge
The Merge is the most anticipated event in the history of cryptocurrencies and decentralized finance. The Ethereum Merge is an update to the Ethereum blockchain network by which it will transition from a proof-of-work consensus mechanism to a proof-of-stake model. The goal of this switch is to make the network more energy-efficient, ESG compliant, scalable, and secure. The Ethereum Merge claims to make the Ethereum blockchain network up to 99.9% more energy efficient, as miners will not need to use power-hungry hardware to mine Ethereum. Instead, all transactions on the network will be validated by individuals known as validators.
With Ethereum being the biggest and most widely used enterprise blockchain network, a sudden shift in the consensus mechanism would have cost major institutions huge sums of money. The research and development teams around the world working on the Ethereum blockchain network split the transition into two stages: the development and launch of the beacon chain, and the Merge. The Beacon Chain was launched in December 2020 and allowed for a proof-of-stake-based blockchain network to run in parallel with the Ethereum blockchain. The Beacon Chain has been in constant development and testing and has acquired a population of 0.40 million validators who are staking over 13 million Ethereum tokens actively.
Risks of The Merge
While the shift to a proof-of-stake mechanism will make the Ethereum network more ESG friendly, it may also make it more prone to certain risks. One of the most alarming risks of the Merge is the possible security vulnerabilities the new system will be exposed to. Bloomberg’s David Pan, a noted cryptocurrency researcher and journalist, recently spoke about the potential risks of the Merge in an interview with Emily Chang. Here is an excerpt from the interview:
“We have been seeing growing concern among some of the investors saying that you know like there will be more awareness of the potential security risks during and after the Merge. One argument from the investors is that the Merge basically has been simulated in serious test nets but not in the real environment so nobody knows what would really happen during the Merge and after the Merge. Another reason is that you know hackers are not incentivized to initiate attack against the network during the Merge on the test nets. It is a really really big question mark around the Merge, on whether it’s going to be successful or not.
We have seen attacks that have caused investors losing billions of dollars, so who knows you know what will happen after the Merge. We would certainly see a more vulnerable state of the network during and after the Merge and everybody is actually expecting to see you know how this would unfold. Some of them are saying it’s going to be successful but some of the others who are more skeptical of the transition are saying the risks are bigger and bigger over time.”
Ethereum, being one of the largest enterprise blockchain networks that previously required miners to use expensive hardware and powerful GPUs to mine, will not require GPUs for transactions on its network after the Merge. This will have repercussions on the GPU market and some of the major players that manufacture powerful mining rigs, workstations, and graphics cards. Tech companies that are potentially vulnerable to the Merge include NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Intel Corporation (NASDAQ:INTC).
Pixabay/Public Domain
Our Methodology
We scoured Reddit threads and popular cryptocurrency subreddits, such as Cryptocurrency News & Discussion, to determine the 10 cryptocurrencies Redditors are watching right now and will be trading after the Merge. We have listed these cryptocurrencies in ascending order based on their market capitalizations.
Redditors are Buying These 10 Cryptocurrencies After The Merge
10. Ergo (ERG)
Market Cap as of August 31: $103 Million
The Ergo blockchain is a layer-1 blockchain network for decentralized finance contracts. The network achieves consensus via proof-of-work. Ergo currently allows support for oracles, stablecoins, NFTs, and decentralized exchanges. Ergo is developing a decentralized exchange for Cardano tokens, one of the top 10 cryptocurrencies in the world by market cap. As of August 31, Ergo has a market cap of roughly $103 million and over 32 million ERG tokens in circulating supply.
Redditors are discussing the Merge and what they plan on buying or mining after Ethereum shifts to a proof-of-stake consensus mechanism. Among their top picks was ERG, the native token of the Ergo blockchain network. Redditors are bullish on Ergo because of the platform’s ASIC-resistant and GPU-friendly mining algorithms.
Leading GPU manufacturers such as NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Intel Corporation (NASDAQ:INTC) are vulnerable to the Ethereum Merge and could suffer from demand weakness as enterprises that make use of the Ethereum blockchain will not be in need of as much high-powered mining equipment.
9. Conflux (CFX)
Market Cap as of August 31: $106 Million
Conflux claims to be a blockchain network not bounded by barriers. It is the only blockchain network that has been accepted by regulatory authorities in China and is under constant development of its services. The platform uses a proof-of-work consensus mechanism and its native token is CFX. The network’s PoW consensus mechanism makes use of a tree graph algorithm which optimizes speed and security for transactions that take place on the network. As of August 31, Conflux has a market cap of roughly $106 million and over 2 billion CFX tokens in circulating supply.
Redditors are bullish on Conflux and are adjusting their rigs to mine CFX as they see the currency capturing further mining market share as Ethereum transitions to a proof-of-stake blockchain network. The Conflux network can currently transact at a speed of up to 6,000 transactions per second.
8. Flux (FLUX)
Market Cap as of August 31: $257.26 Million
Flux provides cloud infrastructure for the development of decentralized and Web 3.0 applications. The network’s native cryptocurrency is a proof-of-work token named FLUX. As of August 31, Flux has a market cap of $257.26 million and a circulating supply of 258.56 million tokens. As Web 3.0 projects and cryptocurrencies rise to prominence, FLUX has the potential to capture further market share and go to the moon.
The Flux cloud infrastructure has been thought of as a decentralized alternative to Amazon.com, Inc.’s (NASDAQ:AMZN) AWS cloud infrastructure. On August 24, Bernstein analyst Mark Shmulik reiterated his ‘Outperform’ rating and $160 price target on Amazon.com, Inc. (NASDAQ:AMZN). As of June 30, Fisher Asset Management owns 48.6 million shares of Amazon.com, Inc. (NASDAQ:AMZN) and is the largest shareholder in the company. The investment covers 3.65% of Ken Fisher’s 13F portfolio.
Reddit is bullish on Flux because of the platform’s growth potential due to its leading position in decentralized cloud services. As Ethereum transitions to a proof-of-stake mechanism, Redditors are shifting to mining and buying more FLUX than ever before.
7. Optimism (OP)
Market Cap as of August 31: $272 Million
Optimism (OP) is a layer-2 blockchain network built on top of the Ethereum layer-1 network. Optimism makes use of optimistic roll-ups, which are useful in scaling Ethereum off-chain, i.e. outside of the Ethereum blockchain network. Once transactions are finalized, they are added to the Ethereum mainnet. Optimism solves the problem of gas fees as it combines multiple Ethereum transactions and bundles them up into one single transaction which is then added to the Ethereum blockchain. Therefore, instead of paying heavy gas fees, individuals transacting Ethereum using Optimism’s platform can pay a fraction of those fees. OP is the native token of the network and as of August 31, Optimism has a market cap of roughly $272 million and about 234.7 million tokens in circulation.
Reddit crypto communities are bullish on Optimism because of Ethereum’s dependence on roll-up technology. The Merge is expected to include sharding solutions to scale transactions. Ethereum’s mainnet is expected to maintain its main chain status and allow layer-2 roll-up providers such as Optimism to scale Ethereum transactions.
6. Lido DAO (LDO)
Market Cap as of August 31: $563.60 Million
Lido DAO provides liquid staking solutions and services for transacting Ethereum. As the Ethereum network makes the transition to a proof-of-stake model, services like Lido DAO are going to experience significant growth as Lido DAO does not require investors to lock their assets to earn a staking yield. The network’s native token is LDO. As of August 31, Lido DAO has roughly 312 million LDO tokens in circulation and a market cap of $563.60 million.
Redditors are bullish on Lido DAO for the long term because of the platform’s leading position in liquid staking services. The Lido DAO community has also attracted the attention of various investors and has raised hundreds of millions of dollars to fund its research and development. In May of 2021, Lido DAO raised roughly $73 million in a funding round led by Paradigm, a crypto venture capital firm. In May of 2022, venture capital firm Andreessen Horowitz invested $70 million in Lido DAO.
As the Merge happens and Ethereum shifts to a proof-of-stake model, mining hardware manufacturers could lose a major chunk of their value due to a decline in demand for GPUs for crypto mining. As of August 31, NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Intel Corporation (NASDAQ:INTC) have all lost roughly 40% of their value year-to-date.
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Disclosure. None. Redditors are Buying These 10 Cryptocurrencies After The Merge is originally published on Insider Monkey.
