Bank of America sees Ethereum institutional adoption rise after The Merge

The Ethereum network’s transition from Proof-of-Work to Proof-of-Stake (PoS) will not solve scalability or high fees, but could lead to broader institutional adoption. This view was offered by Bank of America analysts, as reported by CoinDesk.

The notable drop in energy consumption after The Merge could allow some investors to acquire Ethereum for the first time.

“The ability to deploy ETH and generate higher-quality yields (lower credit risk and liquidity risk) as a validator or through staking […] also may spur institutional adoption,” the BofA analysts stated.

In their view, this dynamic would also reflect on the ecosystem of dapps. As an example, they cited Nexus Mutual, a DeFi mutual-insurance project, noting that it must generate yields on its reserves to become an alternative to traditional companies.

Institutions typically invest in corporate and sovereign debt, but instruments with similar risk and return characteristics are hard to find in the digital-asset ecosystem, the analysts noted. In their view, Ethereum staking could be a suitable alternative.

Earlier, Ethereum planned to migrate the mainnet to PoS around September 15.

On September 6 they activated the Bellatrix upgrade. The upgrade is the final step before The Merge.

Former BitMEX CEO Arthur Hayes predicted a rally in Ethereum’s price to the $3,000 level after the mainnet’s transition to PoS, according to the report.

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