Remembering the merge
Discover more from Frontrun
Remembering the merge
What happened the night of the merge: NFT drops, hot takes, celebrations, wealth destruction plus a whale paying 45 eth for the first POS block!
On approximately September 15th, 2022 ~12:30AM pacific standard - Ethereum’s consensus mechanism moved from proof of work to proof of stake, signaling the next phase of the protocol’s journey to ultra-sound money and the next generation of internet technology.
Ethereum has now:
Achieved deflationary status at gas prices above 15 gwei
Reduced energy consumption by 99.95%
Reduced the amount of eth issued to validators by 90%
For those who need a speed run on the merge, the Ethereum Foundation is the gold standard on the tldr - below:
🪦In memory of the event, and as a farewell to the Ethereum miners who served the protocol faithfully until the end, let’s take a moment to celebrate and laugh out loud at some of the hot takes, nft drops, degen activities, and watch parties around the interwebs on the night of the merge”🪦
🎼 Ethereum miners celebrating the life and legacy of their GPU rigs one last time - rest in peace old friend → reddit post here
🎼 Jonathan Mann - a musician who wrote 5,000 songs for 5,000 days in a row (that’s 14 years) commemorates song 5,000 in celebration of the merge:
🔥 The Ethereum community bringing heat with the merge memes:
…. “ahhhhhh finally”….
… “at your age I had a house, a career and two kids”…
…the conversation you hear at most crypto meet-ups in the bay area…
… the rest of humanity outside of the web3 ecosystem…
…and the conversation you’ll have with your grandkids about the merge.
🖥️ NFTs and POAPs commemorating the merge
Mainnet canvas POAP
Mainnet merge POAP
Proof of Merge NFT
Consensys Regenesis NFT
EIPanda white list NFT drop
Aave foundation collectible lenster tweet
Mergebears NFT
Transition paying 45 ETH for the first POS block
The Ethereum foundation dropped a user-curated canvas commemorating the merge. Owners of their limited edition POAP could “tag” the canvas, documenting their participation in the event, with funds from the sale going to Stateful Works → reddit post here
The canvas page 4 hours before the merge…
…and canvas page after the merge…
..I couldn’t find this on Twitter, but from the live stream: Stateful ETH is dropping a Mainnet merge POAP by sending $10 of eth to stateful.eth, see the below. Note the comments in the chat were hilarious, screaming “SPAM” non-stop!🤣
…the a16z team dropping a dynamic non-transferable NFT which changes its shape up through the merge launch (no longer available)…
…Consensys dropping a free commemorative NFT set called “Regenesis”. Live for 72 hours after the merge. As of this writing over 60k NFTs have already been minted…
…EIPandas dropped a limited edition set of 5,875 NFTs to a whitelist of adopters. The floor price was was 5 ETH at launch but has since dropped to 0.02…
…Aave foundation commemorates the merge with a collectible tweet on lenster, free to anyone with a lens profile…
…Merge bears public minting up through the merge launch..
…and my favorite: thetransition.wtf paying 45 eth for the first block created after the merge. Transaction details here and block details are depicted below:
…The premium paid for this transaction is definitely commemorative in nature. The transition has minted a limited edition of 100 NFTs commemorating the move from proof of work to proof of stake. You can see the contract address in the transaction details that correspond to the NFTs. Transition NFT #1 currently has a floor price of 1 ETH on opensea. So far the Transition team is doing better than the VanityBlocks folks who turned the last PoW block into an NFT at a cost of ~32 eth. The current floor price of the “Last POW Block” on opensea ? 10 eth. At least they’re not the artists scammers who are trying to hawk Vitalik’s first tweet post-PoW as a “1 of 1” NFT mint for 69 eth or $100k. Sanity prevails, for now, as the auction has no takers.
💰 The merge and ultrasound money
Aave variable lending rates > 100%
Ethereum experiencing ultrasound money - for a minute
leveraged long eth traders get rekted
In the spirit of a united DeFi degen community, there were for sure some questionable activities leading up to and shortly after the merge. Aave’s variable borrow and lending rates on Ethereum were 71% to lend and 191% to borrow within the hour of the merge. Note that borrowing and lending eth on the platform is temporarily frozen, but post-merge rates have fallen back to 1% to lend and 5% to borrow.
Gas fees immediately after the merge peaked as high as 100 gwei according to etherscan’s gas tracker. This caused an immediate rallying cry to the ultrasound money community as, for a very short period, eth became deflationary. The revenue it collected + the amount of eth burned was greater than the amount of eth paid in security. ~12 hours later, we can see that average eth gas prices are now down to ~11 gwei..not so ultrasound.
…and just as I predicted in my previous analysis “A case for $1,200 Ethereum”, long positions are getting rekted post-merge. Degens are using platforms like GMX and FTX to enter into leveraged long positions to benefit on the upside of the merge despite the downward macroeconomic pressure we’ve discussed in other guides. The net result? Their positions were liquidated, in aggregate $104mm of wealth was destroyed in a 12-hour window.
🎉 A night of celebration
Degenerates aside, the eve of the merge was a night of celebration, and I’m glad to have had the opportunity to participate.
The Ethereum foundation launched a mainnet viewing party…
…and shortly after midnight, in an eerie moment of silence, the consensus layer switched to proof of stake, the merge was over and the Twitterverse celebrated!
Cheers to the entire Ethereum community and the web3 ecosystem at large. It’s quite impressive that a decentralized group of enthusiasts were able to successfully upgrade a $200 billion dollar financial system with zero downtime. Goldman Sachs should take note!
Forever an eth permabull,
John Cook
September 15th, 2022
San Francisco, CA
www.frontruncrypto.com
In case you weren’t sick of the merge, here’s more merge-related content:
A tldr on the merge 👈 if you want a speed run on the merge
Mapping out the merge 👈 if you want a 40-page deep dive on the merge