The Transition from PoW to PoS
The Ethereum Merge marks a complete transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS). Since the implementation of EIP-1559, miners on Ethereum’s execution layer (PoW chain) have earned an average of 15,135 ETH daily. These earnings often create selling pressure on ETH due to:
- High operational costs for miners
- Inability to stake ETH
- ETH inflation
Post-Merge Validator Revenue
After the Merge, validator income is estimated to reach 3,277 ETH daily, calculated based on current ETH staking volumes and average MEV/tips since EIP-1559.
Why PoS Reduces Selling Pressure
In PoS, miners are less likely to sell ETH aggressively because:
- Operational costs drop significantly.
- Validators earn more via staking.
- ETH tends to become deflationary.
Debunking Common Misconceptions
A prevalent myth is that early stakers will immediately cash out post-Merge, creating sell pressure. However:
- Staked ETH cannot be withdrawn until the Shanghai hard fork (6–12 months post-Merge).
- An exit queue prevents mass withdrawals.
- Daily issuance drops to 1,777 ETH (vs. 15,135 ETH under PoW).
Risks and Countermeasures
While risks exist (e.g., technical hiccups), PoS mechanisms like:
- Reduced block rewards
- Burned base fees
- Non-liquid validator rewards
strengthen ETH’s investment appeal.
👉 Explore Ethereum’s post-Merge potential
FAQ
1. Will ETH become deflationary after the Merge?
Yes—burned transaction fees and reduced issuance may push ETH into deflation under high demand.
2. Can I unstake my ETH immediately post-Merge?
No. Withdrawals unlock only after the Shanghai upgrade (~6–12 months later).
3. How does PoS improve Ethereum’s scalability?
PoS paves the way for sharding, boosting TPS and reducing gas fees long-term.
4. What happens to miners after the Merge?
Miners must transition to staking or other PoW chains (e.g., Ethereum Classic).
5. Is staking ETH safer than holding it?
Staking offers yields but carries slashing risks; evaluate personal risk tolerance.
For strategic insights on ETH’s evolution, check out our deep dive 👉 here.