Nansen AMA: What impact will the merge have on the future development of the Ethereum ecosystem?
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Nansen AMA: What impact will the merge have on the future development of the Ethereum ecosystem?
During an AMA on the upcoming Ethereum merge, Sassal, co-founder of EthHub, shared his thoughts.
Navigating Web3 tides with focused insightsWritten by: Nansen Alphα
Compiled by: TechFlow
In an AMA on the upcoming Ethereum Merge, Sassal, founder of The Daily Gwei and co-founder of EthHub, shared his insights. Below are the key questions raised during the AMA:
1. Will miners surrender without a fight? Can you walk us through what’s happening behind the scenes regarding the Merge? What do you think miners might do after the Merge?
Miners will collectively continue operating the PoW chain at the merge block. There will be at least one PoW fork, as it's a straightforward way to profit from the Merge. However, without support from stablecoins, DeFi ecosystems, or oracles, the entire chain would essentially collapse. The hard fork uses TTD (Total Terminal Difficulty) rather than just a block number to prevent miners from gaming hash power.
2. Assuming the Merge goes smoothly and forks fade away, what do you see as Ethereum’s next challenge?
The most apparent challenge right now is how strong censorship can become, as we saw last week with Tornado Cash. Ethereum’s biggest challenge is executing its existing roadmap. The roadmap contains many items—some in development, others still in research—and it’s definitely not a simple path forward.
Another major challenge is ensuring people understand the value proposition of Ethereum L1 versus L2, which is more about social and marketing efforts. In the future, L2s will be where activity happens—that’s the whole point of the rollup-centric roadmap.
3. Which Rollup project are you most interested in, and why?
In terms of ecosystem, Optimism and Arbitrum are clearly leading. Arbitrum and Optimism are similar in EVM compatibility/equivalence but differ in their approaches and codebases/philosophies.
However, it’s hard to say which one is technically better. There’s still significant debate over whether Optimistic Rollups or ZK-Rollups—and which specific ZK solutions—are superior. Generally, the most interesting projects are those that can build sustainable ecosystems without extreme token incentives—or even no incentives at all. While having a token isn’t necessarily bad, there should be clear value accrual and a sustainable growth roadmap.
4. How do you view the dominance of staking derivatives in the ETH PoS system? How do you think this will impact the broader ecosystem?
We’ve already seen Lido’s dominance rise to 33–34% at one point, though it has since dropped back to 31%. Lido itself isn’t a single entity—it currently distributes staking across about 29 staking providers, and this number will grow over time. Of course, centralization remains a concern. Some potential solutions include:
- Building more decentralized staking providers like Rocket Pool;
- Staking with other providers to dilute stETH’s share dominance, especially since withdrawals aren’t yet enabled;
- Maintaining social pressure on these entities;
5. As Ethereum scales, what are your thoughts on the Ethereum asset? If Rollups become major users of L1 (as expected), then L1 will need significant activity to accumulate revenue. Thus, even if overall Ethereum activity increases sharply, revenue could still decline.
ETH’s value accrual primarily comes from its role as a store of value/money. A store of value means the asset’s value/purchasing power doesn’t depreciate against fiat over time. And monetary premium arises from people wanting to hold ETH.
If all activity shifts to L2—as we expect—it won’t negatively impact ETH as an asset. While absolute numbers might decrease, overall this shift will be positive for ETH.
ETH’s value stems from its store-of-value/money attributes, much of which derives from utility (on-chain activity). L2 enables users to do more on-chain, creating a strong feedback loop where value ultimately flows back to L1.
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