Ethereum Merge & NFTs: How Will the Merge Impact NFTs?

6 min readSep 9, 2022

Unless you’ve been hanging out in a Faraday cage the past few weeks, you should have heard about perhaps the single biggest event that the crypto space has ever seen — the Ethereum merge.

It seems like forever that the excitement and discussions surrounding Eth 2.0 and “the merge” have been taking place. And with the announcement that the merge will take place between September 13th and 15th, that has only ramped up.

This, of course, isn’t surprising given that the Ethereum network has by far the most assets tied to it via DApps, NFTs, and DeFi protocols. So, it only makes sense that Ethereum stakeholders are curious as to how the merge will affect them.

But what does the Ethereum merge mean for NFTs and NFT holders?

For the average NFT collector, it doesn’t mean much, at least for now. There are some things to consider, however. So let’s first take a step back and dive into what the merge is and why this all matters.

What is the Ethereum merge?

Simply put, the Ethereum merge is a major upgrade to the core infrastructure of the Ethereum blockchain that will transition the network from a proof of work (PoW) system to a proof of stake (PoS) system. This will not only drastically cut energy use (a 99.95% reduction by the way), it will also increase the security of the network, and will allow for increased scalability in the future via Sharding. So, in short, the upgrade will provide more sustainability, security, and scalability for the network.

But why is it called the merge? Well, it’s derived from how the transition will be implemented as it will combine, or, “merge,” the current Ethereum Mainnet and the Beacon Chain.

In 2020, the Beacon Chain, a separate PoS blockchain, was created with the goal of it eventually superseding the current chain as Eth 2.0. And it’s been running in parallel with the Mainnet ever since.

For the Ethereum 2.0 merge to be successful, the existing PoW Mainnet needs to be transferred to the Beacon Chain. This includes the transfer of all of the ETH currency (ether) as well as all of the information that’s stored on the Eth 1.0 chain.

Why the Ethereum Merge Matters

As the second most popular cryptocurrency in terms of market cap, and by far the most popular blockchain for dApps and NFT trading, the Ethereum blockchain is used in more ways than any of the other blockchains. So, the fact that the Ethereum PoW network is extremely carbon and energy intensive and has limited transaction capabilities is quite problematic. The annual CO2 emissions of the Ethereum PoW system are roughly 6.8 megatons per year, or about the same as the country of Cyprus. And Ethereum consumes 23.2 TWh/year of energy which is about .1% of the world’s annual consumption.

Amid an ongoing climate crisis due to excess greenhouse gas emissions, the 99.95% reduction in energy consumption is vital for the long-term success and increased adoption of the network as the energy consumption and resulting emissions are often cited as reasons for potential users opting to use other blockchains.

How will the merge impact NFTs?

Within the last year, NFTs took the world by storm, and the blockchain of choice for almost all of the NFT trading activity was Ethereum. So, with tens of millions of collectibles and artworks at stake with such a massive upgrade, what does the Ethereum merge mean for NFTs?

Well, for the average NFT collector, not much is likely going to happen. However, there are a few ways that things might get a little weird and some things that you should watch out for.

The Possibility of Forked NFTs

When the merge finally happens, there is a possibility that a hard fork will occur. If this does, essentially there will be duplicates of all of your Ethereum assets. One will be on the PoS chain and the other will be a remnant from the PoW chain. Meaning you may have double the number of NFTs. However, only the PoS NFTs will have ubiquitous support. OpenSea has already stated that if a hard fork does occur, the marketplace won’t accept forked ETHPoW NFTs post-merge.

Replay Attack

Only happening in the case of a hard fork, a replay attack, or, a man-in-the-middle attack, is when a bad actor secretly intercepts a transaction on one chain and replicates it on the other chain to benefit them. This can happen if you interact with the PoW chain while you have PoS assets in the same wallet. To avoid this, don’t make any transactions on the old PoW chain from the same wallet where PoS assets are held.

However, Ethereum core developer Marius Van Der Wijden told Decrypt that this shouldn’t be a problem as ETHPOW (a spinoff chain if the fork occurs) will use separate chain IDs that won’t allow such illicit transactions to happen. But while it’s said that it won’t be an issue, the best way to protect yourself is to not interact with the PoW chain at all.

Cheaper Gas Fees

Unfortunately, there WON’T be cheaper gas fees after the merge, at least in the beginning. This is perhaps one of the most commonly misunderstood aspects of the merge. This might be because it’s assumed that the fees will go down since other PoS chains (Tezos, Solana, Cardano, etc.) have very low gas fees.

Additionally, the Ethereum network speed will also likely still be somewhat limited because of the blockspace demand that will still exist. And, on an even sadder note, the gas fees may even increase at the beginning due to the increase in the demand for blockspace following the merge.

But, on the bright side, this won’t be forever. Gas fees will likely fall in the next stage of development when Sharding is introduced. While this won’t likely be until sometime in 2023, it’s something to certainly look forward to.

Environmentally Friendly NFTs

The most important way the merge will impact NFTs is in merely a passive way but addresses the main reason that much of the mainstream media (hello New York Times) have lambasted NFTs, and that’s the negative environmental impact as previously described.

So, while the gas fees may still exist, the environmentally damaging component of NFTs due to high energy consumption will be drastically reduced.

Beware of Scam Artists

Whenever such an upgrade occurs, malicious actors will always be there to take advantage of the resulting confusion. And it’s no different with the Ethereum Merge.

If a fork occurs, there will likely be an initial flood of ETHPoW NFTs being sold as described as real NFTs. However, as OpenSea stated already, they will only sell PoS NFTs. Also, Yuga Labs has said that they will only recognize NFTs on the PoS ETH chain for the relevant NFT licenses and utilities.

Such statements and warnings will not stop scammers to try to sell off these nearly worthless assets to the unsuspecting public.

And to make it even more complicated, scammers may also prey on those trying to protect their NFTs by offering services or methods to make sure that their NFT is kept safe during the merge citing technical jargon that may not be understood by the average collector.

So, as is the motto in the crypto world, DYOR and be weary of anyone making promises or offers that seem too good to be true as it’s likely to be exactly the case. While there is no guarantee that the merge will go according to plan, the best thing to do is to just wait it out and avoid any risky transactions or interactions. Stay informed and stay safe.