The very mention of the word “merge” is sweet music to most investors’ ears, as it means either a company is expanding or being bought out and combined with another firm, usually for a nice premium. Take Zynga, for example, with Take-Two Interactive ($TTWO) agreeing in January to pay a 64% premium ($12.7 billion) for the %Farmville and %WordsWithFriends maker.
That deal doesn’t even make it into the top 5 merger deals so far in 2022. The %Microsoft ($MSFT) purchase of %ActivisionBlizzard ($ATVI) tops that list with a sticker price of $68.7 billion in cash (a 45% premium), a deal that Microsoft framed as giving them a leading spot in the $175 billion gaming industry, plus a stronger position in the metaverse, an emerging market of immersion undergirded by virtual and %AugmentedReality.
While “merge” may mean one thing in the traditional stock space, the Merge has a totally different meaning in the world of %Blockchain. Expected to transpire between September 15-16, the Merge involves Ethereum switching from a proof of work (PoW) model to a proof of stake (PoS) consensus mechanism, a move that will make the world’s second biggest crypto by market cap far less energy intensive and further decentralized.
Currently, Ethereum – along with some other %Cryptocurrencies, including Bitcoin utilize a PoW model that has miners vying to complete a cryptographic puzzle first to validate data and create a new block that becomes part of a blockchain, an immutable decentralized ledger. Known as crypto mining, the process involves racks loaded with electricity guzzling computers designed specifically to solve problems for specific cryptocurrencies. It is estimated that mining for Bitcoin alone consumes about 150 terawatt-hours of electricity annually. That’s more than the country of Argentina, population 45 million.
Ethereum has a solution: employ a staking model and switch to PoS, something that many other cryptocurrencies are currently employing. Unlike PoW, PoS randomly selects validators relative to the amount of ETH (ether) they have staked and how long they’ve held it. Staking can be complex or relatively simple depending on how deep a person wants to dive into understanding the process. In the simplest sense, it is a way to earn rewards for buying and holding cryptocurrencies. Not all cryptos allow staking, including Ethereum, until it flips into 2.0 with the Merge.
In PoS, validators earn native crypto rewards by creating new blocks when selected and confirming others when it’s not their turn to create. A block doesn’t get added until enough participants attest the block is valid, at which point a reward in ether proportionate to the amount of ETH staked and is distributed to all involved. Mining rigs are no longer necessary in PoS and the vastness of the network lends additional security.
The Merge is a monumental development in the blockchain space that has investors looking for beneficiaries. Coinbase (COIN) is expected to be a winner, as gauged by Goldman Sachs forecasting the exchange generating between $250 million and $600 million in additional revenue from ether staking. JPMorgan is on board too, saying Coinbase should be a “meaningful” beneficiary of ether staking.
Upstart %Metavesco ($MVCO), who already is involved in liquidity pools for ETH, has its sights set on staking ether as well. The company, headquartered outside of Atlanta, Georgia, is a new public entity since taking over a clean shell, changing its name, raising capital, and launching a new web3 enterprise this year. The company is exclusively focused on investments at the core of the next iteration of the internet, such as the Metaverse, NFTs (non-fungible tokens), and staking and liquidity pools for select cryptocurrencies, primarily only the majors with utility and upside like Bitcoin ($BTC), Chainlink ($LINK), ApeCoin ($APE), and Ethereum ($ETH). Chainlink, the first decentralized network of oracles (software that allows outside data to enter a blockchain), is the most widely used oracle network for powering hybrid smart contracts.
ApeCoin is the cryptocurrency of Yuga Labs, the creator of the Bored Ape %YachtClub (BAYC) and Mutant Ape Yacht Club (MAYC) NFT franchises and upcoming Otherside metaverse project. Otherside is one of the most ambitious metaverse projects in development today, revolving around digital communities and participants interacting using avatars while exploring immersive virtual worlds. All transactions within the Otherside ecosystem will be conducted in APE.
Metavesco owns Otherdeed NFTs, which entitle the owner to early entrance into Otherside and the ability to be some of the first people to claim land in the digital world. A select group (~10%) of Otherdeed NFTs include a Koda, a collection of 10,000 (same number of BAYC NFTs) rare alien creatures that make up a “race of celestials” inhabiting Otherside. Investors looking at Kodas are keenly aware that the value of Yuga’s BAYC collection stretches into the billions of dollars, the MAYC is worth about $400 million, and the Cryptopunks series of avatars that Yuga has rights to is worth nearly $1 billion.
Yuga has been quite secretive about the function of Kodas in Otherside, which is creating a stir about their unique traits and high value. It appears that MVCO has an Otherdeed with a Koda, considering one is being used on the MVCO Twitter page.
As he awaits the Merge and the opportunity to foray into staking ETH, Metavesco CEO Ryan Schadel also seems to be hawking the chance to stake APE. On Sunday, Schadel tweeted about the expected launch of APE staking this fall, which included a link to a tutorial on how staking APE will work.
Metavesco (OTCPK: MVCO) Full Corporate Write-Up: Click Here.
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