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Bank of America said the merger update could lead to wider adoption of ethereum (ETH) institutionally. According to the bank, investors who are prohibited from buying Proof of Work (PoW) cryptocurrencies will be able to buy ETH once the Ethereum blockchain transitions to Proof of Stake (PoS).

US Bank Institutional Investments to Get Ethereum

The Ethereum upgrade, referred to as the merger, will see the ETH blockchain network transition from a proof-of-work (PoW) mining system to a proof-of-stake (PoS) consensus mechanism. Although the update does not address concerns about the scalability of the ETH blockchain and lower transaction fees. In a research report released Friday, Bank of America said it is paving the way for a combined upgrade called Surge.

The merge is the first of five planned upgrades to the Ethereum network and paves the way for the Surge upgrade. The report notes that after the merger, the expected significant reduction in energy consumption could lead to institutional investors showing interest and for the first time, Ethereum (ETH) will become part of the investment portfolio.

Analysts Alkesh Shah and Andrew Moss said: “The ability to stake ETH and earn higher returns, including reduced credit and liquidity risk, could also facilitate institutional acceptance as validators or through staking services, rather than block lending applications. can provide."

 

 

Bank of America also stated that higher returns will have a positive impact on the Web3 decentralized applications (dApps) ecosystem. The bank also said that decentralized insurance protocols like Nexus Mutual need to generate returns on their reserves to be a viable alternative to traditional insurance companies. Insurance companies tend to invest their reserves in corporate and government debt, but in the crypto industry, instruments with similar risk and return characteristics are hard to find. Staking on the Ethereum network may be the closest option, according to Bank of America.

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