The Merge update, scheduled for September, will reduce the energy density of the Ethereum network, transfer the emission of the asset to a deflationary model, and “pave the way for a more scalable future through sharding.” According to CoinDesk, this was stated by Citigroup analysts.

Experts reminded that the merger of the main cryptocurrency network with Beacon Chain is one of the five phases of the planned Ethereum modernization. Consolidation can increase blockchain throughput by 10%, reducing block time from 13 seconds to 12 seconds.

The update also lays the groundwork for the next upgrade, Surge. Second, it will allow Ethereum to process up to 100,000 transactions per second. The effect is planned to be achieved using fragmentation technology.

.@VitalikButerin claims #Ethereum It will be able to perform “100,000 transactions per second” after the completion of 5 key stages:

• Combining
• Surge
• Boundary
• Purification
• Extravagance

A quick breakdown of what each stage means $ETH. 👇 pic.twitter.com/FnaWww8mHZ

— Miles Deutscher (@milesdeutscher) July 22, 2022

According to analysts, the transition to the Proof-of-Stake (PoS) consensus algorithm will result in a 4.2% annual reduction in Ethereum emissions volume. Citigroup emphasized that this will have a positive impact on the perception of ETH as a store of value.

Experts explained that the move to PoS will transform the cryptocurrency into a “profitable asset” operating on a network with abundant cash flow. This will ensure that the Ethereum ecosystem is the foundation for most DeFi applications.

The bank also stated that after the upgrade, ETH can be seen as a relatively energy efficient and environmentally friendly digital asset. Analysts expect grid electricity consumption to drop by 99.95%.

Recall that Markus Thilen from the management company IDEG predicted the consolidation of Ethereum offerings after the activation of The Merge.