Lending ETH During The Merge | How to Earn Up to 70% APY

Lending ETH During The Merge

Before we get started, this is not a recommendation or endorsement to buy any token mentioned.

Over the past few weeks, I’ve covered countless strategies for lending, staking, and providing liquidity with ETH on major DeFi protocols such as Aave, Morpho, Curve, Hop, and Lido. Given The Merge is only hours away, I’ll keep this brief. 

But first, let’s be sure you’re caught up on what will be the impact of The Merge!

  1. Ethereum consensus will move from proof-of-work to proof-of-stake, a long awaited development, in the works for many years. It’s probably the most significant event in the history of crypto since the launch of Ethereum!
  2. The supply/demand balance of ETH will change considerably as daily issuance of ETH block rewards reduces by ~90% and is no longer rewarded to miners running energy intensive computation to secure the chain. What’s most interesting for those holding ETH as a store-of-value is that we will likely see reduced selling pressure on ETH, having eliminated legacy PoW miners selling most of their tokens to pay for electric bills and hardware costs. Additionally, there’s an expected deflationary issuance of ETH, when the aggregate base fees of transactions burned is greater than the issuance of new ETH each block. For almost a year now, many have used websites like ultrasound.money to simulate the annualized ETH issuance rate post-Merge based on the transactions on-chain. Below, as of the last 30 days, the projected Supply Growth of ETH annually would be 0.1% and during higher congestion, that rate actually becomes negative, meaning more ETH is burned per year than that which is rewarded to validators to secure Ethereum.

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