After the network switched to a proof-of-stake (PoS) consensus method as a result of the “Merge,” JPMorgan (NYSE:JPM) expressed some reservations about the Ethereum blockchain.
The blockchain was divided in two as a result of this modification, with one based on Proof-of-Work and the other on Proof-of-Stake.
At least 19 former ether mining pools are active on the original version, which still utilizes proof-of-work (PoW) verification, according to JPMorgan, and certain exchanges and platforms have showed support for it. The availability of two versions can thus cause division among the Ethereum community.
The bank cited the fact that “just a few entities hold the vast share of the ETH staked” as a second reason for concern about how decentralized the blockchain has become.
JPMorgan pointed out that the cost of ether (ETH) had dropped significantly. This decrease was probably brought on by “rumor buying and news selling flows unique to the Ethereum merger event,” as well as general risk asset weakness brought on by central banks’ more assertive stance.
The merger is the first of five anticipated blockchain improvements.
In the meanwhile, the futures market’s transition to “backwardation” is a “manifestation of the move towards more pessimistic sentiment in crypto markets in recent weeks,” the bank stated. When an asset’s spot price is greater than its futures price, backwardation takes place.
The biggest winner of the merger in terms of mining was Ethereum Classic’s ETC coin. The hash rate of the network has doubled, and tokens on other blockchains with PoW functionality, such as Ravencoin and Ergo, have also experienced significant price gains.