Raoul Pal: The Merge Will Make Ethereum Even More Attractive to Institutional Investors

Raoul Pal: The Merge Will Make Ethereum Even More Attractive to Institutional Investors

Recently, former Goldman Sachs executive Raoul Pal explained why, for investors, Ethereum remains the “safest, easiest allocation.”

Prior to founding macro economic and investment strategy research service Global Macro Investor (GMI) in 2005, Pal co-managed the GLG Global Macro Fund in London for global asset management firm GLG Partners (which is now called “Man GLG”). Before that, Pal worked at Goldman Sachs, where he co-managed the European hedge fund sales business in Equities and Equity Derivatives. Currently, he is the CEO of finance and business video channel Real Vision, which he co-founded in 2014.

Ethereum’s “Merge” hard fork, which is when the Ethereum network is making the transition from proof-of-work to proof-of-stake), is expected to take place around September 15.

Here is how Ethereum Foundation explains The Merge:

The Merge represents the joining of the existing execution layer of Ethereum (the Mainnet we use today) with its new proof-of-stake consensus layer, the Beacon Chain. It eliminates the need for energy-intensive mining and instead secures the network using staked ETH. A truly exciting step in realizing the Ethereum vision – more scalability, security, and sustainability.

It’s important to remember that initially, the Beacon Chain shipped separately from Mainnet. Ethereum Mainnet – with all it’s accounts, balances, smart contracts, and blockchain state – continues to be secured by proof-of-work, even while the Beacon Chain runs in parallel using proof-of-stake. The approaching Merge is when these two systems finally come together, and proof-of-work is replaced permanently by proof-of-stake.

Let’s consider an analogy. Imagine Ethereum is a spaceship that isn’t quite ready for an interstellar voyage. With the Beacon Chain, the community has built a new engine and a hardened hull. After significant testing, it’s almost time to hot-swap the new engine for the old mid-flight. This will merge the new, more efficient engine into the existing ship, ready to put in some serious lightyears and take on the universe.

In a recent interview with Abra’s “Money Talks” podcast, Pal, told Bill Barhydt — the founder and CEO of Abra — that he expected Ethereum’s Merge upgrade to create a “massive supply shock” that would be favorable for the price of $ETH.

As reported by The Daily Hodl, Pal said:

A lot of institutions wrongly didn’t like Bitcoin because of ESG [environmental, social and governance] concerns. Proof of stake gets rid of that. Additionally, [ETH] now has a yield, so that’s something that institutions love… So now you need [to] make one asset allocation decision, which is, ‘I believe in this Web 3.0 technology world.’ So where do you allocate? Bitcoin or ETH? It’s going to be ETH. Why? Because you’re going to get something between a 6-10% yield. So that’s extraordinary...

That’s the safest, easiest allocation. That happens to be ETH. Now, other earlier-stage tokens — whether it’s Solana or AVAX or whatever — are… earlier on the adoption curve, so you get that accelerated phase, so they’ll probably outperform.

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Featured Image via Pixabay

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