Ethereum is expected to officially launch the merger in September, and Ethereum coin prices have recently seen a significant recovery. Ethereum researcher Vivek Raman said today that after the merger, he believes Ethereum will have a chance to overtake Bitcoin, while Lucas Outumuro, head of research at IntoTheBlock, noted that Ethereum will be a deflationary asset after the merger, with net issuance likely to be between -0.5% and -4.5%.

Ethereum core developer Tim Beiko on the 14th gave a timeline for Ethereum Merge, which is expected to launch during the week of September 19th. The price of the Ethereum (ETH) coin has also made a remarkable recovery recently as the merger date draws closer, rebounding from a low of $1,006 on Friday to as high as $1,664 yesterday, representing a maximum gain of more than 65 per cent in 11 days.

Ethereum researcher Vivek Raman said in an interview with Cointelegraph today that he believes Ethereum has a chance to take over the number one position from Bitcoin as it transitions to POS. "Just from an economic perspective, Ethereum does have a chance to overtake bitcoin due to supply shocks," he said.

Why will Ethereum overtake Bitcoin?

1. Problems to solve

Transaction fee competition

The TPS (transactions per second) of Bitcoin is 7, and that of Ethereum is about 15. Once the number of transactions to be processed exceeds the blockchain's processing limit, the verifier (miner) responsible for producing the block will select the high-fee transaction package. Let the question of "whose trade is processed first" be settled by the market mechanism.

In general, when we send out a deal, we want it to be processed as quickly as possible, but we want to pay as little as possible, so the bidding strategy becomes "see what everyone else is offering" and then outbid them by a little bit.

This will require users to "predict" how crowded the blockchain will be in order to squeeze into the next block with the least amount of money, adding to the confusion. Block resources are inelastic

Another issue EIP1559 aims to address is spike/off-peak scheduling of blockchain resources.

Currently, each block can block a fixed amount of transactions, but the use of demand fluctuates, usually more during the week than on weekends, and more during the evening and late night of Asian time than during the day.

Occasionally, there will be sudden demand such as an ICO or NFT offering, which in a short period of time will greatly push up the fee to a very exaggerated level. For users who are not willing to pay such a high price, it is equivalent to a temporary collapse of the blockchain.

2. Solution evolution

Second price auction

The original transaction fee is what you pay will be charged (the first price auction), so everyone has to be careful to choose a number that is not too high or too low. If the second price auction method is adopted, the transaction in the same block will be charged the same fee regardless of the original price, and the fee will be determined by the lowest bidder in the transaction.

That way, users don't have to think twice, just pay the highest price they're really willing to pay, and anything above that will be refunded anyway.

3. Community reaction

Miners angry

This could be an unexpected development for the developers.

It's not the first time that the core developers of Ethereum have been at loggerheads with miners, including the lowering of block rewards and the cancellation of the ProgPoW upgrade. And PoS will put miners out of work for the foreseeable future. Collapse of the miners began to all kinds of crying in the community, the said developers to rob money, it says this would destroy the block chain of security (in fact, on the other hand, can lead to block of high fees accounted restructuring), with mineral pool friendly block chain columnist also slaughtered on the matter: EIP1559 economics should be put forward when off to reconstruct a time... Finally, large mining pools even once again called for hard fork resistance.

4. Automatic fee setting

This should be the intention of EIP1559. After the upgrade, users do not need to observe the status of blockchain mempool, as long as the processing fee of the previous block is a little more, there is a high probability that the next block will be executed. But for those who want to go lower than the current market price and are willing to wait to save money, the timing of the package is a matter of luck.

Ethereum has more space for adoption

Raman also said that while Bitcoin will maintain its role as digital gold, Ethereum will have "greater scope for adoption" as the foundational layer of the decentralized finance (DeFi) economy.

However, the merger will not reduce Ethereum's high transaction fees, which remain a major problem for Ethereum. Vivek Raman points out that Ethereum will solve this problem through Layer2 scaling solutions.

Vivek Raman says:

Users need to know that all of their activities should be on Layer2, and then Layer2 will eventually use Ethereum as the basis for Layer1 for settlement, security, and decentralization.