The Merge represents the shift from PoW (proof-of-work) to PoS (proof-of-stake). It's one of the biggest "software upgrades" in the crypto space, aiming to slash the network's energy consumption by 99.5%, and will take place on 15 September 2022. All changes to the Ethereum network will be done behind the scenes, and there will not be any changes in day-to-day experiences. You can read the ultimate guide for the merge by Chain Debrief here.
Markets are watching the Merge keenly. According to Coin Desk, ether (ETH) funding rates have slipped to their most negative since July 2021. When they’re negative, generally speaking, it means that there’s more demand from traders to bet on price declines. It is a way for traders to readjust their exposure before the Merge. If the Merge goes ahead successfully, one would expect these short futures positions to be closed out and funding return to positive territory.
An interesting observation to note is the strong capital inflows into Ethereum Classic, a blockchain similar to Ethereum that’s expected to remain proof-of-work following the Merge. Whether this will continue past the Merge is up to personal speculation.
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