Ethereum's Merge: Market liquidity, efficiency and volatility in the Proof of Stake Era

Bin Liu, Tina Prodromou, Sandy Suardi and Caihong Xu

Economics Letters, 2025, vol. 247, issue C

Abstract: This study analyzes the impact of Ethereum's Merge upgrade on market liquidity, efficiency and volatility in cryptocurrency markets. The Merge, which transitioned Ethereum from Proof of Work to Proof of Stake, aimed to improve scalability, security, and energy efficiency. Findings show a significant improvement in Ether's liquidity and a slight enhancement in market efficiency post-Merge, along with reduced trading activity and intraday volatility compared to Bitcoin. These results offer insights into investor behavior, confidence, and external market influences, relevant for market participants and policymakers.

Keywords: The Merge; Proof of Stake; Proof of Work; Cryptocurrency liquidity; Ethereum; Sustainability (search for similar items in EconPapers)
JEL-codes: G12 G14 G18 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:247:y:2025:i:c:s0165176525000394

DOI: 10.1016/j.econlet.2025.112202

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