How will the NFT market react to the Ethereum merger event?
- Susan G. Hall
- on Sep 05, 2022
This year, Ethereum turned seven, surprising users with a giveaway in the form of Ethereum Merge. The highly anticipated Ethereum Merge is officially scheduled for September 16. The Ethereum merger will have a significant impact on the crypto sector, including NFTs and digital collectibles. It is reported that 80% of the total NFTs are traded on the Ethereum blockchain and have recorded stunning revenue due to the NFT hype, including the two most famous NFT collections, CryptoPunks and Bored Ape Yacht Club. Therefore, a question arises for the creators of NFTs, what will happen to the millions of NFTs after the merger?
Impact on the NFT market
NFTs are one of the essential sectors of the Ethereum network. After the Ethereum merger, NFTs will still be in your digital wallet. According to Adam McBride, if the Proof-of-Work fork remains, the user will have two versions of NFT. One will be the NFT on the old Proof-of-Work fork, and the other will be the post-merger Proof-of-Stake NFT. If all goes well, NFTs will be actively running on the newly updated Ethereum mainnet.
NFT creators and investors might encounter a double transaction “replay attack”, which means that a transaction can take place on the newly merged PoS fork if a user transacts on the PoW fork. Thus, there is a slight chance of compromising the security of NFTs because someone else can access your NFTs or any other digital asset, and your NFTs might be lost due to an unknown transaction that you did not have ever performed.
We may even see price gaps in NFT price floors because of this. However, we anticipate that the mentioned impact may not occur, but there is a probability that it will occur, and you should be aware of it.
However, there are also excellent impacts. The most robust effect will be the reduction of carbon consumption by up to 90% for NFT minting and servicing. Moreover, analysts in the cryptosphere predict a surge of Ethereum after the merger, and the creation of NFTs on the Ethereum network will become more convenient and easier.
To preserve NFTs from possible impacts, users are advised to withdraw their NFTs from sale and transfer them to their new PoS wallets. However, it is not guaranteed that everything will go according to plan; users can take the necessary steps to protect their NFTs.