The Merge, the most anticipated event in Ethereum’s history, makes a lot of promises. Changing Ethereum’s proof-of-work (PoW) consensus mechanism to the less demanding proof-of-stake (PoS) mechanism will undoubtedly please many because it will significantly reduce the network’s energy consumption, possibly by more than 99 percent. The Merge is also good news for ETH validators, who safeguard the network by staking their coins, as it is anticipated that rewards for their work will increase following the upgrade. How much higher could ETH staking yields become following The Merge? Change from mining to validating. Validators, not miners, will be in charge of confirming transactions on the Ethereum network after the PoW to PoS transition. By staking their ETH, ETH owners verify the network. The validators receive yields in exchange for their staked ETH holdings. An important metric for measuring these staking rewards is the Annual Percentage Rate (APR), which illustrates how much validators can make on their staked holdings annually. According to the Ethereum website, the current APR for ETH solo stakers is 4.1 percent. Once Ethereum’s transition to PoS is complete after the Merge, it is anticipated that this rate will rise. However, analysts’ predictions for how much the APR might increase vary. According to Tom Dunleavy, senior analyst at Messari, the APR could increase from 6.8 percent in a “very conservative” scenario to 13.7 percent in a “very aggressive” scenario.
