ETH 2.0 transition will bring some new interesting, not before seen dynamics, at this scale

The current supply (ETH1) is going to get split by deposits to ETH2, a one way ticket

So we get two partially silo’d split supplies, where one can move to the other, but not back 1/

For a while, we basically get two assets. ETH1 and ETH2. Like a fork, but without a 1:1 copy of the supply

Surely, if both assets have equal fundamentals, arbitrage between the two assets should balance price

But each asset will fundamentally be different 2/

First of all, ETH2 will have different utility until ETH1 smart contracts are fully supported and moved to ETH2, a long time out

Secondly, they will have different supplies, different monetary policies, PoW vs PoS, so different dynamics 3/

Third and last, issues on one chain are likely not present on the other, and vice versa. It’s novel tech, issues can occur.

I am not saying anything bullish or bearish here, long term a succesful migration is huge, but the timeline is long, difficult and uncertain = volatile 4/

On top of that, another issue will be the unknowns of how service providers will deal with this

Are we really getting two assets on exchanges? Or will some exchanges come with a different solution? Is this a centralized effort, or decentralized?

Good luck!

5/5

p.s. locked or less supply, lowering circulating supply, is a bullish dynamic

But consider the backdrop of uncertainty as well

I am eager to see how it will all play out