If the hard fork “The Merge" of the Ethereum successful, ETH will benefit significantly. However, there are many lesser known projects and tokens that are predicted to outperform cryptocurrency ranked second after the event.
#1: Lido Finance and Liquid Staking Protocols
Lido Finance is one of the best publicized projects that can benefit from The Merge. Lido allow users to stake ETH using the Beacon Chain validator Ethereum while maintaining liquidity for deposits. Through the issuance of an equivalent amount of stETH representing deposits ETH on Beacon Chain. Through Lido, sTETH holders currently earn around 4% APY.
However, after The Merge, ETH staking profits will increase significantly. Current returns include only block rewards distributed by the protocol Ethereum. But after the network Ethereum Switch from Proof-of-Work to Proof-of-Stake, all transactions will be processed by validators. This means that all priority fees currently sent to PoW miners will be distributed to validators. PoS, which increases the staking yield.
According to CoinSharesm's forecast, the ETH stake yield must at least double after The Merge, or at least the profit must be as high as 10 to 12%. Increased yields will lead to more demand for staking ETH, ultimately benefiting Lido.
LDO is trading at $1.99 and down nearly 12%.
#2: Manifold Finance
Next is Manifold Finance, a key infrastructure development protocol after The Merge for the Ethereum network. Manifold is a middleware protocol that separates block building and block validation into two separate operations. Currently, Ethereum miners are responsible for converting transactions into valid blocks and attempting to mine them using their hashpower. However, after The Merge, separate entities will be able to simultaneously convert transactions into blocks and validate, leaving space for a new “block generator” stakeholder in the Ethereum validation sub-economy. .
The protocol takes advantage of this by aggregating multiple endpoints such as Flashbots and Eden Network while maintaining direct access to individual mining pools or validator nodes. Different entities can compete to build each Ethereum block using their own maximum extractable value strategies; validators can then choose which they want to validate against based on the most profitable goal. The block generator helps validators find the most optimal blocks to validate and both parties profit from the interaction.
Manifold earns revenue from providing services – which will be distributed to those who stake the protocol's FOLD tokens. If The Merge succeeds, Manifold's staking revenue will increase as more block makers and validators take advantage of the protocol's engine.
At the time of writing, FOLD is down nearly 10% and trading at $55.
#3: Optimism and Layer 2 Networks
Third on the list is Optimism, a layer-2 Ethereum network that owns an open market tradable token. Because layer-2 networks like Optimism works on the Ethereum mainnet for security and authentication, The Merge leverages them in a number of different ways.
For example, the adoption of Proof-of-Stake will strengthen mainnet security and thus layer-2 security. Furthermore, the change to the Proof-of-Work mechanism is expected to reduce Ethereum's energy consumption by more than 99% and improve the green qualities of Optimism.
A more concrete benefit of this comes from the next Ethereum upgrade after Merge – EIP-4488. Currently, layer-2 networks like Optimism are “rolling” transactions into “batches”, sending them back to the Ethereum mainnet along with various data for validation. Proposition 4488 would seek to reduce the cost of posting this data on the mainnet, reducing the amortization cost of layer-2 transactions. As a result, layer-2 deals are even cheaper.
If The Merge is successful and EIP-4488 is implemented, gas charges on Layer 2 can be reduced by 5 times. This will make trading on layer-2 even more attractive, boosting usage and demand for layer-2 native tokens like OP.
OP is dropping more than 5% and knife hovering around the $1,18 mark at press time.
#4: Ethereum NFT
Next on the list seems to be an exception, but there's a strong argument to back it up. Instead of a specific token or protocol, we are looking at NFT on Ethereum as an asset class that can surpass ETH in the event of a successful The Merge.
Because after the event, ETH can appreciate thanks to higher staking yields and significantly reduced issuance. As ETH rises, the price NFT on the network will tend to go up in the same direction. Psychological factors can play an important role in this case. When ETH goes up, holders will feel richer. And when people feel rich, they prefer to spend their money (in this case, ETH) on things that represent their wealth — namely, NFT.
However, not every Ethereum NFT collection benefits from these effects. If you are going to bet on NFT as a leveraged ETH game, it is best to pursue projects with a proven track record. For avatar NFTs, collections like Bored Ape Yacht Club or CryptoPunks might be the safest bet. Other NFTs that should work well include top-notch construction art from the likes of Tyler Hobbs and Dmitri Cherniak.
#5: Eden Network
This is the last project that can surpass ETH after The Merge is a bit more speculative than other projects. Eden Network is a maximum extractable value (MEV) protection protocol that has a strong relationship with many prominent players in the Ethereum validating system. Through staking of the EDEN token, users are granted higher priority for their transactions and also have access to Eden Network's private forwarders.
However, when Ethereum moves to Proof-of-Stake, the core functionality that put the Eden Network on the map will disappear. Fortunately, the protocol has known this for a long time and is already preparing to turn its services around. After Merge, Eden will work with other protocols like Manifold Finance to increase block production efficiency while ensuring user transactions are secure. Additionally, Eden is building a new product to help maximize the profits that users can generate from staking tokens. The protocol has developed its own unique productivity engine, which is currently being deployed on Avalanche with the cooperation of Yield Yak and Geode Finance.
If The Merge succeeds, Eden plans to implement its profit-generating architecture on Ethereum, working with popular liquidity staking platforms like Lido and Rocket Pool to maximize returns for end users. together. While these developments will not affect Eden's tokenomics structure, they have the potential to increase protocol usage. Like Lido, if a strong narrative can form around the Eden Network, its token will likely act as a proxy for the protocol and increase in value.
Currently, the native token of the protocol, EDEN, is trading at $0.09 and down nearly 1% on the day.