\u201cIt\u2019s important to remember that initially, the\u00a0Beacon Chain\u00a0shipped separately from\u00a0Mainnet. Ethereum Mainnet \u2013 with all it\u2019s accounts, balances, smart contracts, and blockchain state \u2013 continues to be secured by\u00a0proof-of-work, even while the Beacon Chain runs in parallel using\u00a0proof-of-stake. The approaching Merge is when these two systems finally come together, and proof-of-work is replaced permanently by proof-of-stake.<\/em><\/p>\n \u201cLet\u2019s consider an analogy. Imagine Ethereum is a spaceship that isn\u2019t quite ready for an interstellar voyage. With the Beacon Chain, the community has built a new engine and a hardened hull. After significant testing, it\u2019s almost time to hot-swap the new engine for the old mid-flight. This will merge the new, more efficient engine into the existing ship, ready to put in some serious lightyears and take on the universe.<\/em>\u201c<\/p>\n Anyway, on Tuesday, Hayes published a blog post (titled \u201cETH-flexive\u201d), in which he talked about the consequences of a successful and a failed Merge event:<\/p>\n \u201cIf the merge is successful, there is a positive reflexive relationship between the price and the amount of currency deflation. Therefore, traders will buy ETH today, knowing that the higher the price goes, the more the network will be used and the more deflationary it will become, driving the price higher, causing the network to be used more, and so on and so forth. This is a virtuous circle for bulls. The ceiling is when all of humanity has an Ethereum wallet address.\u00a0<\/em><\/p>\n \u201cIf the merge is not successful, there will be a negatively reflexive relationship between the price and the amount of currency deflation. Or, to put it another way, there will be a positively reflexive relationship between the price and the amount of currency inflation. Therefore, in this scenario, I believe traders will either go short or choose not to own ETH.<\/em><\/p>\n
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