The years-anticipated Ethereum merge from proof of work to proof of stake finally happened on September 15, and it went off without a hitch. The Ethereum network now uses 99% less energy.

The merge went "what seems to be flawlessly," Joe Lubin, CEO of crypto software giant ConsenSys and a co-founder of Ethereum, told Decrypt in an exclusive video interview last week. "I've asked around in a bunch of different contexts for any awareness of anything that broke, and I haven't heard one thing."

So, why is ETH down a brutal 22% in the month since the merge?


Lubin's answer is that the price action immediately after the merge was a "possibly inevitable 'sell the news' kind of activity," along with some Ethereum miners "unloading their ether inventory as they shut down their rigs." As for why ETH has continued to drop since then, along with Bitcoin and the rest of the crypto market?

It's the macroeconomy, stupid.

"The economy is broken, and it's likely to remain broken for a while," Lubin said. "So we remain the tail that is being wagged by a very sick dog: the global macro situation. But our ecosystem and our company are doing quite well, even with with reduced volumes, reduced intensity. I think we're all enjoying just building."

It's the favored explanation from almost every founder in the crypto ecosystem right now, as crypto markets remain battered by the same economic headwinds in the U.S. (inflation, Fed interest rates) and globally (war in Ukraine, the hangover of COVID-19) that are weighing on stocks, bonds, and other more established investment vehicles.

Solana founder Anatoly Yakovenko points to the same factors—and sees at least another year of the bear market.


“Looking at macro stuff, my guess is there's probably 12 to 18 months more of this brutal, Fed rates going up,” Yakovenko said on the latest episode of Decrypt's gm podcast. “But there is an end to it. And just like the last bear market, a lot of teams that built and focused on product-market fit, and really tried to build amazing products—a lot of those succeeded, I think, in a very dramatic way.”

FTX CEO Sam Bankman-Fried put it in similar terms, and maybe the most bluntly, speaking at Anthony Scaramucci's SALT conference in New York last month: "Everything's down this year, because dollars are up this year."

Until money gets less expensive, crypto markets are expected to remain in the doldrums. But Lubin and other builders remain as optimistic as ever on the key parts of the crypto industry.

"I think NFTs still have a ton of legs, NFTs are going to undergo so much innovation," he told Decrypt. "I imagine we're post our irrational exuberance moments with respect to DeFi. I think it'll continue to innovate and mature quite significantly, but I think the real building will be in the development of the Web3 economy."

(Disclosure: ConsenSys is one of 22 strategic investors in Decrypt.)

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