While Ethereum’s switch to a proof-of-stake (PoS) consensus mechanism from proof-of-work (PoW), a transition known as the Merge, does not address concerns over the blockchain’s scalability or high transaction fees, it has implications that reach beyond simply acting as a precursor for the next stage in the process, the Surge, Bank of America (BAC) said in a research report Friday.
The notable reduction in energy consumption after the Merge may allow some institutional investors to purchase ether (ETH) for the first time – those who were barred from buying tokens that run on blockchains using PoW consensus mechanisms, the report said.
“The ability to stake ETH and generate a higher-quality yield (lower credit and liquidity risk) as a validator or through a staking service rather than on block-box lending/borrowing applications may also drive institutional adoption,” analysts Alkesh Shah and Andrew Moss wrote.
Bank of America says that a higher-quality yield also has ramifications for...
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