Source: Coingape

The Merge is a welcome development in the crypto industry as it ends the energy consumption of a number of crypto critics and sceptics. Some have even hoped the Merge would have a ‘Midas touch’ effect in the broader crypto market. Bitcoin has been bearish for a while, struggling around the $20K - $25K mark. Meltem Demirors, the chief strategy officer at Coinshare, feels the Merge has no significant addition to Ethereum. In an interview on the 22nd of August with CNBC, she stated: “While internally there’s a lot of enthusiasm within the crypto community and Ethereum community around the merge as an event that will dramatically reduce supply while potentially driving demand. One of the realities on the macro side is people are worried about rates”. Her concerns about the Merge do not end there as she sees some stagnancy in the future of the network, adding: “I don’t think there’s a lot of new capital coming in to buy Ethereum on these changed fundamentals and technical. There’s also some risk that needs to play out with the market”. Meltem sums up the Merge as a “buy the rumour, sell the news” event. Regardless of this though, news about the Merge sent the crypto market on a short-term upward spiral in July 2022. However, data provider, Kaiko, reports that “ether’s price fall on the 19th of August brought a swift decline in open interest on derivatives - contracts that traders used to leverage bets on the future price of ETH”. Although many derivatives trades were liquidated owing to margin calls, this didn’t last as money flooded back into the ETH futures market - a significant spike in open interest. Furthermore, Coindesk notes “that ether’s perpetual contracts funding rates have significantly fluctuated; this resembles future “contracts on commodities but without expiration dates.”

The timetable for the Merge

Source: Ethereum

Many proponents of the Merge feel Ether futures will experience contango after the coalescence. This is because the Merge will reduce the supply of ETH, whereby increasing the demand for it and dragging the price upwards in the process. The director of research at Arca, Katie Talati, also agrees with this: “Ether’s real price appreciation will happen after the Merge, driven by increasing ETH locked up staking/securing the chain.” Specialised crypto asset trading company, Cumberland, projects $40million worth of miners being removed from the market, causing a 90% drop in yearly issuance. For miners, the Merge has not been taken lightly as there have been pushbacks from some of them. Several have proposed splitting the ETH chain, allowing the current PoW to continue post-merge. If this is permitted, ETH holders on the Merge will receive free forked PoW tokens. Interestingly, Coinbase launched its cbETH-wrapped Ethereum staking token ahead of the token and Binance has moved to allow ETH holders to withdraw assets from the exchange from the two forks. For stakers, the annual yield is expected to double its current 4% and this could jettison staking. For ETH holders wondering what they have to do in anticipation of the Merge, there is nothing expected of them. There is the possibility of mob actions taking place, whereby defeating the idea behind decentralisation. So, on balance, what does the Merge mean for the Ethereum blockchain? Binance has highlighted five myths regarding the Merge:

• the Merge will create a new token - the answer is, no

• gas fees will decrease - however, sharding, is due in 2023 which aims to address gas fees by reducing network traffic and splitting the blockchain into smaller, more manageable parts

• transactions will become faster - transaction speeds will be a little faster: Ethereum Mainnet’s takes 13 seconds, Beacon Chain’s takes 12.2 seconds 

• stakers can withdraw their rewards after the Merge - those who have staked ETH will not be able to take funds for 6-12 months after the Merge

• Ethereum will suspend its network - it is expected there will be zero downtime. 

Some believe it is positive as it means less energy will be required to process and register entries on the Ethereum blockchain. As ever, there are various opposing views as to the impact the Merge will have on the price of ETH - some bullish, some bearish. As the date for the Merge to take place draws near Consensys has issued its summary of the impact that the Merge will have on institutions which was only released on 5th September, which you may find useful.

How blockchain will transform real estate

Source: Datadriveninvestor.com

Advantages of using blockchain in the real estate sector:

• Real estate assets and property management: Tokenisation refers to a method by which sensitive information is replaced by a surrogate value, referred to as a token. Tokenisation of real estate assets according to Alphapoint “is the process of creating a digital asset that represents a single property or portfolio of properties on a blockchain-based system”. Essentially, property house owners can split their assets into tokens, which enables partial ownership of a property. Therefore, you’re not obliged to purchase the entire property at once, and using tokens makes it cheaper for users to diversify investments and gain equity. Tokenisation also offers the promise of improving liquidity since one can resell tokens through secondary trading on a digital exchange.

Three benefits of using blockchains for land registries

Source: whitecase.com

• Blockchain-based smart contracts: a smart contract is a self-executing contract outlining the terms of the agreement between a seller and a buyer which are written into lines of codes. Letters of intent, listing agreements, offer sheets and closing documents are examples of contracts which may become digitised on blockchains. Using smart contracts rather than paper contracts can considerably speed up the real estate transactions. 

How smart contracts work in a simple property sale

Source: whitecase.com

• Property search using blockchain-enabled MLS: in many jurisdictions real estate is transacted using Multiple Listing Services (MLS) for accessing the details of a property. The property listing on MLS provides significant and applicable information such as the location, features and availability of the property. MLS that use blockchains could change the listing data to be distributed across a peer-to-peer network, making the information more trustworthy and accurate. A public blockchain-based MLS could enable information about a property at a much lower cost.
  
  

• No intermediaries: according to a report by Deloitte: “Lawyers, brokerages and banks have long been a part of the real estate ecosystem. However, blockchain could shortly begin a shift in their roles and participation in realty transactions.” Blockchains can potentially remove intermediaries, thus saving fees on commissions and costs charged by the intermediaries. This additionally offers the promise to speed up the time it takes for the title on a property to be transferred from the seller to the buyer. 

Source: ButterflyMX.com

• Liquidity: real estate has long been thought of as a non-liquid asset since it takes time for sales to be completed. However, by tokenising real estate using the growing number of digital exchanges, these tokens backed by real estate can potentially be traded 24/7.

• Costs reduction: the transparency related to a decentralised network can also reduce costs of executing a property transaction and, in time, we may well see each individual property creating a digital certificate unique to the actual property - not unlike an NFT. Information about the property, such as land search, insurance (e.g., claims for subsidence), any liens on the real estate, etc, can then be checked quickly. A record can be stored of what was checked and when and also highlight any issues that need further manual investigation/clarification. 

• Platforms and marketplaces: real estate technology has been primarily concerned with listings and with connecting buyers and sellers. However, blockchain introduces new ways in which real estate can be traded and can empower trading platforms and online marketplaces to support real estate transactions. For example, ATLANT is a platform that uses blockchain technology to facilitate property transactions. Other digital exchanges include Archax, Tokeny, ADDX, SDX and TPX. By tokenising real property, assets can then be traded in a similar way as to equities being traded on stock exchanges, and transactions may be done on-line.

There are, however, challenges to using blockchain technology in the real estate sector: 

• certain blockchains are wasteful and expensive in terms of the electricity they consume. 

• the likelihood of human error added to blockchain information may occur; the data that goes into the database has to be accurate as once recorded it is difficult to change.

• there are concerns as to whether or not smart contracts can accommodate the tangled details in property contracts.

• the practical concerns of implementing a stylish technological conception into an intrinsic complex field of law creates a burden on judges, municipalities, attorneys and governments to the extent that the advantages might not outweigh the disadvantages. This is not to say that blockchain technology should not be used but the potential drawbacks should always be analysed and examined before deploying. 

Historically, realtors and estate agents have acted as intermediaries between the seller and buyer of properties since the 1910’s. Having the agent facilitate the property transaction helps establish a tier of trust between both parties, together with the advantage of the fact that agent is skilled in the local and national laws and regulations. However, blockchains are introducing change and ushering a new, more cost-effective and efficient way to buy and sell real estate. On January 9th, 2009, the anonymous Satoshi Nakamoto discharged the first version of Bitcoin and subsequently the blockchain database, and nine years later, in 2018, America oversaw its first ever blockchain based-real estate transaction in Vermont.