Why the Ethereum network’s “merger” schedule has driven up the price of Lido and Ethereum Classic cryptocurrencies

In addition to regular Ethereum (ETH), the price of a tokenised form of Ethereum (stETH) staked on Lido jumped. Lido is a stacking pool that allows you to manage Ethereum stacking even with smaller amounts. Without such pools, you need to spend 32 ETH to become an Ethereum validator.

Those who have made ETH available for staking through Lido receive income, but can only access their tokens after the merger, so stETH trades at a discount compared to the actual ETH on the market. Simply put, this can be understood as a discount you get for the risk that the merger doesn’t happen after all. The discount has decreased slightly again recently. ETH is currently (Friday, July 22) trading at $1640 and stETH is at $1600.

The news of the “merger” also gave a strong boost to Lido’s own token LDO. It is up more than 75% since last Friday.

Ethereum Classic (ETC) is also up a similar percentage. The original Ethereum blockchain token has added around 78%. Ethereum Classic was created during the infamous DAO hack in 2016. At the time, 5% of all Ethereum coins in circulation were stolen.

In the controversial decision, the state of the blockchain prior to the hack was restored using a “hardfork”. However, the original Ethereum blockchain survived as ‘Ethereum Classic’ and still exists today. With a market capitalisation of around $3.5bn, ETC is currently the 23rd largest crypto-asset.

“Merging” for Ethereum Classic is an interesting topic primarily for one reason: with the move to “Proof-of-Stake”, mining on the Ethereum blockchain becomes redundant. However, this does not apply to Ethereum Classic – so miners can switch to this blockchain and mine ETCs in the future. It remains to be seen whether this scenario is realistic, especially in the long term. However, it appears that some market participants are likely to turn specifically to Ethereum Classic.