Since the inception of Ethereum, the founders shared the vision of securing the network by proof of stake consensus. However, Bitcoin and its forks followed the energy-intensive proof of work system. It was evident that the proponents of PoW and PoS will have a rift in the future. In short, the PoW side argues for security through miners, who compete to verify the block. This competition, however, bought some inefficiencies to the picture. These are:

• Duplication of efforts

• Maintenance of energy-intensive infrastructure

• High energy consumption

While PoS supports block verification through validators and delegators. PoS could solve some of the drawbacks of the PoW system, perhaps more efficiently.

Let's look at the post-merge crypto structure from an investment perspective.

 Ethereum founders believed in natural growth in the initial days, which compelled them to adapt to PoW. The plan was to use PoW and solve issues on the go. This approach is in stark contrast to Cardano, which hopes to create a perfect blockchain. It is interesting to see Solana following the Ethereum philosophy of act-repair-act again. More on it later.

On December 1, 2020, Ethereum launched its beacon chain. The beacon chain is more like a demo chain containing Ethereum accounts that enable staking. So, the merge is the process of merging the beacon chain and the current Ethereum mainnet.  

Two immediate consequences of the merge will direct the market in the coming months.

These two form the narratives for major investment opportunities as well.

1. Carbon footprint 

2. Scalability

The carbon footprint of cryptocurrencies has been a hot topic recently due to the global energy crisis. When Ethereum becomes proof of stake, it will significantly reduce its carbon footprint and energy consumption. It will be the first catalyst of the next bull run, cementing the bear market bottom once and for all. 

World cup football is around the corner. Back in May 2022, FIFA (Football Association that conducts World Cup) announced a partnership with Algorand. 

You can read more about the partnership here.

So, Algorand is now the official blockchain platform for FIFA, and Algorand wallet is the official blockchain wallet. Many crypto investors fail to understand the audacity of this partnership beyond some quick gain for their $ALGO bags. 

Let's speculate what can happen during the world cup football. Firstly, there will be banners and ads for Algorand in the live broadcast. There will be simultaneous blockchain meetups and events around the world cup too. FIFA can release NFTs and tokens in the algorand blockchain for sale. It is more like free publicity for the entire crypto industry, and this sporting festival can fuel the second wave of retail adoption. Let's be moderate in our expectations. I am not expecting the world cup NFT sales to trigger a massive bull run. But it can spread the word of web3 around, plant the idea that crypto is safe in commoners' heads, and ultimately propagate the asset class to new investors. 

These new investors are the exit liquidity for the old investors. 

But that's not it!

Algorand is synonymous with green blockchain infrastructure. That is precisely about minimizing carbon footprint. As the narrative of the energy efficiency from the merge cools down, the world cup will reignite the same narrative. 

A confluence of similar narratives from different sources becomes the second catalyst for the bull run. As the stock market recovers and the halving date appears closer, these new investors will kickstart and sustain the bull run. 

Yes, $ALGO can see some real-world adoption. It can also see some pumps, but what it brings to the table is a strong narrative of energy efficiency. 

Scalability is the second outcome of the merge. However, this is not something of an immediate nature. The transition to proof of stake enables Ethereum to achieve scalability through sharding. Sharding is splitting up large blockchain data into small data sets for faster processing. It is futuristic but offers little to the short-term future. It presents some incredible investment opportunities too.

If scalability gets momentum as a narrative, the first project that could reap the benefit will be Polygon. Polygon is currently the most retail-adopted layer-2 of Ethereum. Optimism and Arbitrum are two layer-2 giants accruing significant volume and activity. Among these two, Optimism already has a token - $OP. On the other hand, Arbitrum plans for an airdrop, potentially in October. Evidently, Arbitrum can be the biggest gainer from the scalability narrative. 

Arbitrum is a pioneer in ZK technology, an innovative mechanism to verify block transactions without revealing all the transaction data. 

The space will get energetic with discussions of an $ARBI airdrop even after the merge. As Algorand takes the lead in the energy narrative, it will be Arbitrum that benefits from the scalability narrative. 

When layer-2 and other scaling solutions outperform the market, there will be an organic interest in other layer-1 blockchains.

Solana

I have explained earlier that Solana is mimicking the Ethereum philosophy. It deployed, onboarded users and dApps, and then started to fix problems as they arose. After the Luna crash, Solana has seen decreased developer activity which is reflected in its price action. But recently, Solana shifted the focus to cater to itself as an NFT chain for the time being and restarted the development. This newfound enthusiasm can help Solana to outperform other layer-1 chains. 

Cosmos

Cosmos is another chain focused on value accrual among layer-1s. However, its ecosystem is the chief contributor to the success of $ATOM. Many innovative projects with good VC backing are preparing to launch on Cosmos as separate chains. Cosmos also has a lot going for it, from the Cosmoverse conference and ATOM 2.0. Cosmos plans to redesign the functionality, interoperability, and general architecture of the Cosmos ecosystem. If the proposal for interchain security and app chains goes well, $ATOM can be one of the best performers among layer-1 chains. It also fits the narrative of scalability and energy efficiency. The user experience in the cosmos ecosystem is highly refined, making it attractive for new investors. 

BNB

$BNB is a bluechip crypto along with the likes of Bitcoin and Ethereum. It is like the Apple of the web2 tech world. Binance ships innovative products, improves its ecosystem, and contines to attract new investors to its platform. It stays relevant and modern too. Recently Binance announced a Zero Knowledge solution for the BNB chain, which fits the narrative of the post-merge period. The merge is supposed to bring better interoperability between the EVM chains, and Binance is one of them! 

We have discussed possible narratives and trends for the post-merge web3 world. But what if the merge goes south?

The Ethereum testnet has finished integration with the beacon chain without any issues. Thus the chances of the merge failing are low. Even if it fails, there will be an extreme FOMO towards other layer-1 chains. Talks around the 'next Ethereum' can bring more liquidity to Solana, Cosmos, and others.

MVRV ratio is an estimate of price fairness. The ratio can spot the market top/bottom quite efficiently for value investors. MVRV ratio over 3.5 indicates a possible market top, and we should start taking profits at values over 3. While values below 0.9 signal a market bottom. An increasing trend in MVRV contributes to increasing selling pressure and vice versa.

MVRV is breaking out from the buy zone. Last time, the breakout presented a good relief rally to $24k. We will get a confirmation of the breakout after the merge, and if it stays above 1, we can conclude the local bottom was at $18.5k. However, a sell-the-news event can take place after the merge, which will be the best buying opportunity for Layer-1 cryptos in the short term. 

As the Mt Gox unlock date is confirmed, it will then become the best entry for Bitcoin. For Mt. Gox we need not wait for the actual unlock, as the confirmation of the unlock will have a much bigger impact. 

That’s it for the week, happy merge to all of you!

Since the inception of Ethereum, the founders shared the vision of securing the network by proof of stake consensus. However, Bitcoin and its forks followed the energy-intensive proof of work system. It was evident that the proponents of PoW and PoS will have a rift in the future. In short, the PoW side argues for security through miners, who compete to verify the block. This competition, however, bought some inefficiencies to the picture. These are:

• Duplication of efforts

• Maintenance of energy-intensive infrastructure

• High energy consumption

While PoS supports block verification through validators and delegators. PoS could solve some of the drawbacks of the PoW system, perhaps more efficiently.

Let's look at the post-merge crypto structure from an investment perspective.

 Ethereum founders believed in natural growth in the initial days, which compelled them to adapt to PoW. The plan was to use PoW and solve issues on the go. This approach is in stark contrast to Cardano, which hopes to create a perfect blockchain. It is interesting to see Solana following the Ethereum philosophy of act-repair-act again. More on it later.

On December 1, 2020, Ethereum launched its beacon chain. The beacon chain is more like a demo chain containing Ethereum accounts that enable staking. So, the merge is the process of merging the beacon chain and the current Ethereum mainnet.  

Two immediate consequences of the merge will direct the market in the coming months.

These two form the narratives for major investment opportunities as well.

1. Carbon footprint 

2. Scalability

The carbon footprint of cryptocurrencies has been a hot topic recently due to the global energy crisis. When Ethereum becomes proof of stake, it will significantly reduce its carbon footprint and energy consumption. It will be the first catalyst of the next bull run, cementing the bear market bottom once and for all. 

World cup football is around the corner. Back in May 2022, FIFA (Football Association that conducts World Cup) announced a partnership with Algorand. 

You can read more about the partnership here.

So, Algorand is now the official blockchain platform for FIFA, and Algorand wallet is the official blockchain wallet. Many crypto investors fail to understand the audacity of this partnership beyond some quick gain for their $ALGO bags. 

Let's speculate what can happen during the world cup football. Firstly, there will be banners and ads for Algorand in the live broadcast. There will be simultaneous blockchain meetups and events around the world cup too. FIFA can release NFTs and tokens in the algorand blockchain for sale. It is more like free publicity for the entire crypto industry, and this sporting festival can fuel the second wave of retail adoption. Let's be moderate in our expectations. I am not expecting the world cup NFT sales to trigger a massive bull run. But it can spread the word of web3 around, plant the idea that crypto is safe in commoners' heads, and ultimately propagate the asset class to new investors. 

These new investors are the exit liquidity for the old investors. 

But that's not it!

Algorand is synonymous with green blockchain infrastructure. That is precisely about minimizing carbon footprint. As the narrative of the energy efficiency from the merge cools down, the world cup will reignite the same narrative. 

A confluence of similar narratives from different sources becomes the second catalyst for the bull run. As the stock market recovers and the halving date appears closer, these new investors will kickstart and sustain the bull run. 

Yes, $ALGO can see some real-world adoption. It can also see some pumps, but what it brings to the table is a strong narrative of energy efficiency. 

Scalability is the second outcome of the merge. However, this is not something of an immediate nature. The transition to proof of stake enables Ethereum to achieve scalability through sharding. Sharding is splitting up large blockchain data into small data sets for faster processing. It is futuristic but offers little to the short-term future. It presents some incredible investment opportunities too.

If scalability gets momentum as a narrative, the first project that could reap the benefit will be Polygon. Polygon is currently the most retail-adopted layer-2 of Ethereum. Optimism and Arbitrum are two layer-2 giants accruing significant volume and activity. Among these two, Optimism already has a token - $OP. On the other hand, Arbitrum plans for an airdrop, potentially in October. Evidently, Arbitrum can be the biggest gainer from the scalability narrative. 

Arbitrum is a pioneer in ZK technology, an innovative mechanism to verify block transactions without revealing all the transaction data. 

The space will get energetic with discussions of an $ARBI airdrop even after the merge. As Algorand takes the lead in the energy narrative, it will be Arbitrum that benefits from the scalability narrative. 

When layer-2 and other scaling solutions outperform the market, there will be an organic interest in other layer-1 blockchains.

Solana

I have explained earlier that Solana is mimicking the Ethereum philosophy. It deployed, onboarded users and dApps, and then started to fix problems as they arose. After the Luna crash, Solana has seen decreased developer activity which is reflected in its price action. But recently, Solana shifted the focus to cater to itself as an NFT chain for the time being and restarted the development. This newfound enthusiasm can help Solana to outperform other layer-1 chains. 

Cosmos

Cosmos is another chain focused on value accrual among layer-1s. However, its ecosystem is the chief contributor to the success of $ATOM. Many innovative projects with good VC backing are preparing to launch on Cosmos as separate chains. Cosmos also has a lot going for it, from the Cosmoverse conference and ATOM 2.0. Cosmos plans to redesign the functionality, interoperability, and general architecture of the Cosmos ecosystem. If the proposal for interchain security and app chains goes well, $ATOM can be one of the best performers among layer-1 chains. It also fits the narrative of scalability and energy efficiency. The user experience in the cosmos ecosystem is highly refined, making it attractive for new investors. 

BNB

$BNB is a bluechip crypto along with the likes of Bitcoin and Ethereum. It is like the Apple of the web2 tech world. Binance ships innovative products, improves its ecosystem, and contines to attract new investors to its platform. It stays relevant and modern too. Recently Binance announced a Zero Knowledge solution for the BNB chain, which fits the narrative of the post-merge period. The merge is supposed to bring better interoperability between the EVM chains, and Binance is one of them! 

We have discussed possible narratives and trends for the post-merge web3 world. But what if the merge goes south?

The Ethereum testnet has finished integration with the beacon chain without any issues. Thus the chances of the merge failing are low. Even if it fails, there will be an extreme FOMO towards other layer-1 chains. Talks around the 'next Ethereum' can bring more liquidity to Solana, Cosmos, and others.

MVRV ratio is an estimate of price fairness. The ratio can spot the market top/bottom quite efficiently for value investors. MVRV ratio over 3.5 indicates a possible market top, and we should start taking profits at values over 3. While values below 0.9 signal a market bottom. An increasing trend in MVRV contributes to increasing selling pressure and vice versa.

MVRV is breaking out from the buy zone. Last time, the breakout presented a good relief rally to $24k. We will get a confirmation of the breakout after the merge, and if it stays above 1, we can conclude the local bottom was at $18.5k. However, a sell-the-news event can take place after the merge, which will be the best buying opportunity for Layer-1 cryptos in the short term. 

As the Mt Gox unlock date is confirmed, it will then become the best entry for Bitcoin. For Mt. Gox we need not wait for the actual unlock, as the confirmation of the unlock will have a much bigger impact. 

That’s it for the week, happy merge to all of you!