Cody McGrath 
An investment firm, Bernstein, presents its ideas, with “Merge” on the Ethereum blockchain as the first
Bernstein, a Wall Street financial firm, made seven forecasts last week that it believes might revive cryptocurrency’s growth.
The Ethereum Merge has been a great success
Even if the transition from the proof-of-work consensus mechanism to the proof-of-stake consensus mechanism used to sustain its network is imminent, some uncertainty lingers, according to a note published last week by Bernstein analysts Gautam Chhugani and Manas Agrawal.
They anticipate it will take place between September 10 and September 20, and that it will be a constructive catalyst for cryptocurrencies.
Rollups will cause a surge in demand from crypto users
According to Chhugani and Agrawal, rollups like Optimism and Arbitrum have seen a significant rise in users, on-chain liquidity, and transactions, to the point where rollup activity now accounts for between 15% and 25% of all transactions on the Ethereum blockchain.
Rollups are layer 2 platforms on Ethereum that help execute transactions off-network to improve speed and save fees.
Ether flips bitcoin as the top cryptocurrency
The most asked question by investors is when will the ether (ETH) market cap eclipse bitcoin’s (BTC), the note said. For digital assets, what is more important is that it becomes more of a “innovation-driven, structural trend rather than a macroeconomic asset class.”
Ether represents this “innovation-crypto,” and if it succeeds in building the blockchain digital economy, ETH could be adopted as digital money, the team argued.
DeFi on rollups brings back the DeFi summer
The summer of 2020 was the first “DeFi summer,” but since then, the decentralized-finance sector has underperformed layer 1 chains, the analysts said. Layer 2 scalability, however, is now making DeFi affordable again, the Bernstein analysts wrote, noting that the Uniswap exchange now gets about 10% of its fees from rollups.
NFTs pivot to gaming and play-to-earn becomes play-to-own
“Crypto games will have their own unique culture,” the Bernstein team said. “Over a million NFT (non-fungible token) avatars will become playable characters across multiple interoperable crypto games.”
Chhugani and Agrawal are seeing a big migration in talent to Web3 game development from traditional gaming studios – a strong leading indicator in their opinion.
Token economic designs start to focus on value accumulation
The researchers predicted that by creating “more sustainable token designs,” people will once again be interested in purchasing application tokens rather than the next quick blockchain or retail meme currencies.
Thesis on the fat protocol is renamed the thesis on the fat application
According to the “fat protocol theory,” blockchains’ true value lies not in the applications themselves, but in the underlying protocol.
Bernstein predicted that increased scalability, inexpensive transaction costs, higher user growth on rollups, improved token value accrual, and retail interest in investing in applications that they use will lead to a larger “long-tail of application tokens.”