2 Cryptos That Could Benefit From Ethereum’s Merge More Than Ethereum

Following the upcoming Ethereum (CRYPTO:ETH) merge, these two tokens could actually see more beneficial buying on the horizon.

| More on:
cryptocurrency, crypto, blockchain

Image source: Getty Images

The Ethereum (CRYPTO:ETH) blockchain is all set to merge with its Proof-of-Stake (PoS) Beacon chain. The probable date for this update is Sep. 19, according to Ethereum foundation member Tim Beiko. This merge will bring Ethereum into the world of PoS blockchains.

A PoS consensus mechanism is the more energy-efficient mechanism, which secures and validates blocks. However, Proof-of-Work “mining,” or validation, which Ethereum currently employs, requires significant computing power to solve complex mathematical problems to accomplish the same goals. More computing power means more energy usage and greater environmental impact.

Thus, Ethereum is on track to become much more efficient (both from an energy standpoint as well as functionality). However, there are other projects that may benefit more from this merge than Ethereum itself.

Let’s dive in.

Ethereum Classic

One of the questions many crypto investors have with respect to this merge is, where will all of Ethereum’s miners go?

As it turns out, Ethereum Classic (CRYPTO:ETC), a fork of the original Ethereum blockchain, is likely to garner interest. That’s because this blockchain is very similar to Ethereum, requiring minimal hardware upgrades from current Ethereum miners to migrate over.

Assuming this is the case, Ethereum Classic could see increased interest from investors over time. That’s because Ethereum Classic could be viewed as a more secure blockchain and a realistic alternative to Ethereum (as a hedge, in case something goes wrong with the merge). These factors, along with significant investments from current Ethereum miners of late, suggest this is a token with room to run.

Lido DAO

Lido DAO (CRYPTO:LDO) is an interesting project to consider on its own. This liquid staking solution allows investors with small amounts of Ethereum to stake on the Beacon Chain. Currently, the requirements to stake Ethereum are high — 32 ETH are required. That’s more than $50,000, in today’s prices.

Lido essentially aggregates prospective Ethereum takers, allowing for greater diversity within staking pools. Users receive staking rewards, as well as stETH (Lido Staked Ether), for their troubles.

The problem is, stETH is redeemable for ETH only after the merge takes place. There’s a lockup period, and with uncertainty around the merge date (which has been continually pushed back), as well as liquidity issues, Lido has seen investor concern grow.

That said, with more certainty around what could be a Sep. 19 merge date, investors appear eager to lock in their ETH in exchange for stETH. Should this continue, Lido could be a key beneficiary of this move, to a much greater degree than Ethereum.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chris MacDonald has positions in Ethereum. The Motley Fool recommends Ethereum and Lido DAO.

More on Investing

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing

3 Roaring Stocks to Hold for the Next 20 Years

These top TSX stocks are excellent long-term buys, given their multi-year growth potential and solid underlying businesses.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

grow dividends
Investing

Here’s My Top 3 TSX Stocks to Buy Right Now

Even though the TSX has been rising, there are still some good bargains out there. Here are three top compounding…

Read more »

Target. Stand out from the crowd
Investing

Prediction: This Canadian Growth Stock Could Double by 2030

Alimentation Couche-Tard (TSX:ATD) is a top growth stock that could do well over the next six or so years.

Read more »

Businessman holding AI cloud
Tech Stocks

Could Investing $20,000 in Nvidia Make You a Millionaire?

Nvidia stock has made investors millionaires in the last 10 years. Is it too late to invest to become a…

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

money cash dividends
Stocks for Beginners

Have $500? 3 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now

If you're looking for cheap stocks, these three have a huge future ahead of them, all while costing far less…

Read more »