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This Week in Coins: Ethereum Posts Biggest Losses on Merge Week

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decrypt.co 17 September 2022 14:07, UTC
  
Reading time: ~2 m

This week in coins. Illustration by Mitchell Preffer for Decrypt.

Ethereum is down bad after merge week. The long-anticipated transition to a proof-of-stake network happened on Thursday as planned. Once it did, Ethereum (ETH) dipped 8% to under $1,500, and kept falling further. 

ETH begins the weekend at $1,424, down 17% over the last seven days. It took the biggest losses among the top thirty cryptocurrencies by market capitalization this week. 

Market leader Bitcoin (BTC) also sank. It enters Saturday 7% lower than it was last week, hovering at $19,788 at the time of writing. 

After Ethereum, the second biggest losses—of a little over 10%—were posted by Near Protocol (NEAR), which trades at $4.24; Avalanche dropped to $18.06, and Polkadot fell to $6.87, all of which are so-called “Ethereum killers," aka layer-1 blockchains with high-functionality smart contracts. 

Ethereum Classic (ETC) is down 12.6% and trades at $34.27. ETC is based on Ethereum’s original ledger, which includes an infamous $55 million DAO hack that was wiped from Ethereum by vote. 

Every top thirty cryptocurrency dipped in the past week except Ripple token XRP, which is up 2%, and Cosmos (ATOM), up 3.5%. Cosmos is structurally different to Ethereum in that it's a network of many smaller blockchains but it also offers high-functionality smart contracts.

Ethereum after the merge

On Thursday, Ethereum completed the long-awaited transition from being a blockchain validated by a proof-of-work consensus mechanism—like the one currently employed by Bitcoin, in which miners with the most computing power generate the most coins—to a much more energy-efficient proof-of-stake algorithm—where miners who stake the most ETH validate the most transactions, and reap the rewards. 

The transition went off without a hitch. A report from the Crypto Carbon Ratings Institute (CCRI)  commissioned by Ethereum-centric software firm ConsenSys claims that Ethereum uses approximately 99.99% less energy after the merge. If the number is true, the upgrade has even slightly exceeded Ethereum’s projections.

However, the merge has also resulted in a more centralized Ethereum. According to Martin Köppelmann, co-founder of DeFi platform Gnosis, Coinbase and liquidity staking pool Lido Finance together account for 42% of post-merge Ethereum validators, and the top seven entities control more than two thirds of the stake used to validate transactions.


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