<h2>All you need to know about crypto protocols?</h2><h3>What are crypto protocols?</h3><p class="prosemirror-p-center"><img src="https://lh5.googleusercontent.com/TxCbSNLJPrtNOrZrbBKYw6M209atHdn2Yyh3pw4DGBwQiTPixmBNrqNRn1jYwBOHS7tMZH0IVhU1SntY8lz6yWh1jFXr9opjHmIcTVNMb41vSXNlH3c9K-nt_ugvvEdiR0LqschHRrDr7MK1qOTpvAx6z4CahIsjzmia6Aecr9S1fRhvvumHN_hGqQ" alt="Which protocols benefit from The Merge?" title="Which protocols benefit from The Merge?" width="624" height="416"></p><p dir="ltr">A protocol is a framework of fundamental guidelines that permits data sharing between computers. In terms of cryptocurrencies, they lay the foundation for the blockchain, a distributed database that enables safe online currency transactions. A blockchain protocol can generate a large algorithm, for example, due to the interface of the blockchain, the interaction of the participating computer systems, the type of information that needs to be shared, the incentives available to the community&nbsp;builders or participation, etc. If you want to get the most out of Blockchain technology, you need to know <strong>how protocols affect network performance</strong> and <strong>what limits they can impose</strong>.</p><p dir="ltr">A blockchain protocol can only work if everyone involved in the protocol follows it and works on its layers step by step. Currently, blockchain protocols will be classified into three classes:</p><ul><li><p dir="ltr"><a href="https://www.builder.news/crypto-insights/guide-to-evaluate-layer-1-platforms-dhANJ" alt="An Ultimate Guide To Evaluate Layer 1 Platforms" title="An Ultimate Guide To Evaluate Layer 1 Platforms" target="_blank" rel="" class="">Layer 1</a>: This layer refers back to the underlying system of a blockchain protocol. Examples of layer one protocols include the well-known <a href="https://www.builder.news/crypto-insights/pow-compared-with-pos" alt="PoW compared with PoS" title="PoW compared with PoS" target="_blank" rel="" class="">Proof of Work (PoW) and Proof of Stake (PoS)</a> programs.</p></li><li><p dir="ltr"><a href="https://www.builder.news/crypto-insights/5-facts-about-layer-2" alt="5 facts about Layer 2" title="5 facts about Layer 2" target="_blank" rel="" class="">Layer 2</a>: This class builds on top of Layer 1 and mainly addresses the points of velocity and scalability. An example of a layer two protocol is Bitcoin's Lightning Network, which is designed to make Bitcoin transactions fast.</p></li><li><p dir="ltr"><strong>Layer 3</strong>: This layer provides the adoption and implementation of a blockchain protocol. Many decentralized functions are third-layer protocols. Examples include <a href="https://www.builder.news/crypto-insights/general-knowledge-about-defi-1yU8n" alt="General knowledge about Decentralized Finance" title="General knowledge about Decentralized Finance" target="_blank" rel="" class="">decentralized finance (DeFi)</a> platforms.</p></li></ul><p dir="ltr">Due to the explosive reputation of cryptocurrencies, many current blockchain companies are building on existing protocol layers to handle the current points of their program. Some blockchain protocols now even offer up to 5 protocol layers for maximum scalability.</p><p dir="ltr">So, <strong>what are the main features of protocols</strong>? Crypto protocols only allow certain applications to work - sometimes simply the application of the cryptocurrency itself. Access and security to a blockchain are provided by protocols. Users can manage their data thanks to cryptographic protocols. They enable users to set up accounts, or wallets, on a particular protocol that may be used to make payments and carry out financial activities on other websites. This aids users in avoiding outside interference when storing assets. A role for Protocol projects will be played between Blockchain Platform and DApps, with the exception of Blockchain Platform (Blockchain is also a Protocol). If Dapps desire to develop on a certain Blockchain, they can make use of the services offered by Protocol initiatives.</p><h3>Types of crypto protocols</h3><p dir="ltr">There are hundreds of protocols in use, however, the following five protocols are the most important protocols to follow.</p><h4>Hyperledger</h4><p dir="ltr">An open-source initiative called <strong>Hyperledger</strong> intends to develop a set of tools that businesses may use to install Blockchain technologies rapidly and efficiently. The protocol's libraries, which speed up development, make it a popular choice for Blockchain software applications. Strongly supporting Hyperledger, the Linux Foundation has contributed significant expertise to hasten the development of the protocol. Due to the fact that Linux and Hyperledger are extremely interoperable, these servers are frequently employed in the modern business environment.</p><h4>Multichain</h4><p dir="ltr">In order to promote more effective transactions and to generate new applications for the proof-of-work methods that Blockchain technologies rely on, <strong>Multichain</strong> was founded to assist for-profit businesses in building private Blockchains. As a privately held business, Multichain is able to provide an API that Blockchain development services can use to simplify integration and hasten deployment. The way that Multichain is built to function with fiat currencies and actual stores of value sets it distinct from its rivals. On the other hand, the majority of cryptocurrency projects are focused on the eventual replacement of traditional currency with digital forms of trade.</p><h4>Enterprise Ethereum</h4><p dir="ltr">A version of Ethereum's software geared for commercial use cases is available. The objective of <strong>Ethereum Enterprise</strong> is to expand the commercial use cases for Blockchain software. Businesses may quickly create extensive apps to trade value with Ethereum Enterprise. The main benefit of Ethereum Enterprise is that it enables companies to develop their own private variations of Ethereum while still utilizing the most recent Ethereum technology. Ethereum's license makes it challenging to create proprietary versions of the software under normal conditions, but the enterprise edition offers enterprises a workaround.</p><h4>Corda</h4><p dir="ltr"><strong>Corda</strong> is a rival of Multichain that provides a protocol tailored for businesses. The financial and banking industries have seen the most Corda application development. However, Corda's technology can be applied to a wide range of unique Blockchain solutions. Corda is a suitable option for Blockchain development solutions in the finance sector because it is accredited by the R3 banking consortium.</p><h4>Quorum</h4><p dir="ltr">Like many popular protocols, <strong>Quorum</strong> strives to benefit financial services companies. Quorum is significant since the financial industry strongly supports it. For instance, J.P. Morgan Chase is the protocol's principal financial backer, and other top institutions have contributed additional funds to it. But Quorum has succeeded in continuing to be a freely accessible open-source project. Since the project began by changing the Ethereum code, Quorum is also closely related to Ethereum.</p><p><em><strong>&gt;&gt;&gt; Read more:&nbsp;</strong></em><a href="https://www.builder.news/crypto-insights/profitability-of-defi-protocols-9mcft" alt=" Profitability of DeFi protocols" title=" Profitability of DeFi protocols" target="_blank" rel="" class=""><em><strong>Profitability of DeFi protocols: which one is doing well in the bearish market?</strong></em></a></p><h3>Why crypto protocols matter</h3><p dir="ltr">Blockchain protocols make cryptocurrency transactions possible. All protocols in business aim to achieve or preserve the 4 main ideas of cryptocurrencies: decentralization, consistency, security and scalability.</p><p dir="ltr">The existence of a blockchain protocol also helps to build a blockchain community. A blockchain community consists of the people and organizations that run them, and protocols are in place to ensure that every single transaction is verified by the builders and engineers and thus this fact. run easily. Simply put, with blockchain protocols, cryptocurrencies would not be in their place today.</p><h2>Which protocols benefit from The Merge</h2><p dir="ltr">Some experts suggest that the transition of Ethereum to a proof-of-stake (PoS) network upon <a href="https://www.builder.news/crypto-insights/the-merge-a-pivotal-event-for-ethereum" alt="The Merge overview" title="The Merge overview" target="_blank" rel="" class="">The Merge</a> event could affect DeFi protocols and stablecoins running on the blockchain network. Although major stablecoin issuers like Tether and Circle have announced support for The Merge. However, some community members are still concerned about the effects the update could have. Check out some of the “<strong>The Merge symbioses</strong>” or protocols that could benefit from this Ethereum's The Merge deal with <a href="https://www.builder.news/" alt="Builder.news website" title="Builder.news website" target="_blank" rel="" class="">Builder.news</a>.</p><h3>Staking protocols: Lido DAO and Rocket Pool</h3><p class="prosemirror-p-center"><img src="https://lh5.googleusercontent.com/obaWLekT8PRQGcrfrR9Rj4WK6D8S-m23F68Nvclwg18UQt8RBomNzdJE-rTtF99KOREVmff3An22DQ78AYH_VK21KmuWKA3NDoJy7rIFhlufS1Zc-Sa7LvBuFFJBC6taWuFrWxb0-0iqXB9Fj8oxdvjqloWdBCiWQJDTChM_2JPSmqt3UmUMAkbLkw" alt="Staking protocols: Lido DAO and Rocket Pool" title="Staking protocols: Lido DAO and Rocket Pool" width="624" height="272"></p><p dir="ltr"><a href="https://www.builder.news/project-review/lido-dao-review-what-makes-lido-the-best-ethereum-staking-platform-RQriU" alt="Lido DAO review" title="Lido DAO review" target="_blank" rel="" class="">Lido Finance</a> is one of the best pulicilized projects that can benefit from The Merge. Lido allows users to stake ETH using the Beacon Chain Ethereum validator while maintaining liquidity for deposits. Through the issuance of an equivalent amount of stETH representing ETH deposits on the Beacon Chain. By using Lido, stETH holders currently could earn around 4% APY.</p><p dir="ltr">However, after The Merge, ETH staking profits will increase significantly. The return includes only block rewards distributed by the Ethereum protocol. But after Ethereum moves from POW to POS, all transactions will be processed by validators. This means that all preferred fees currently sent to POW miners will be distributed to POS validators, increasing staking yields.&nbsp;</p><p dir="ltr">According to some crypto experts' forecast, the ETH stake yield might at least double after The Merge, or at least the return should be as high as 10% to 12%. Increased yields will lead to more demand for staking ETH, ultimately benefiting Lido.</p><p dir="ltr">Similar to Lido, <strong>Rocket Pool</strong> is also a staking protocol that offers investors the chance to stake their ETH for potential profits after The Merge. Derivative token issuance protocols represent the traded tokens that are staked on the platform. After The Merge takes place, a network of validators offset by ETH will secure the network. There are currently around 400,000 validators receiving a 5% annual payment (APY).</p><h3>Liquidity pools: stETH+ETH Curve pool</h3><p class="prosemirror-p-center"><img src="https://lh6.googleusercontent.com/i1I7W09F415Bgk3tC-jwKOsO5g22ZNJCiOSLlxnwUHko-wUp85aqdDLxaVmlCpWhgZzh2rs30bi52AF45_E_IGEugm5kFR-nHyAoKTYQgo0MPzJdyhDI0Ev3GtVLrznkckowHLTHCGvtobKdFVllYxWsnVQUFqS5oVP5s7HKNLTbt2zTuCUsWBalig" alt="Liquidity pools: stETH+ETH Curve pool" title="Liquidity pools: stETH+ETH Curve pool" width="624" height="480"></p><p dir="ltr"><strong>Curve Finance</strong> is a decentralized exchange protocol that allows users to trade stablecoins with low transaction fees. Curve Finance is different in that Curve pools will focus on less volatile tokens in order to bring the least price slippage experience to users. Using an automated market maker mechanism, the platform enables anyone to deposit liquidity on the exchange and earn trading commissions.</p><p dir="ltr"><strong>Lido Staked Ether</strong> is a synthertics token representing a user's ownership of Ethereum being staked through the Lido protocol. The value of stETH is converted 1:1 with ETH after The Merge event takes place. Curve pools generate fees based on transaction activity, so if The Merge increases the number of people wanting to trade with the <strong>ETH+stETH pool</strong>, these pools will see an increase in fees for liquidity providers.</p><h3>Layer 2 protocol: Optimism and Metis</h3><p class="prosemirror-p-center"><img src="https://lh5.googleusercontent.com/2ZrKSRt1jJGoj73TebDMUC5TpOWMhIgCiBjLMuCe46MSQiRUgLzYn3WXDoF6XWOkuDb4DySA7D6rtuFvhZQxAjJaiyk2WWOW7CR7tdDKiEbAHUSjHh423WbjPoW6_lYVbun_YmTlF0UgPaqC4CtJgbgo5k3vY4D5sh0PLHTAPy9VI-i_HfktNMzdaQ" alt="Layer 2 protocol: Optimism and Metis" title="Layer 2 protocol: Optimism and Metis" width="624" height="265"></p><p dir="ltr">Layer 2 (L2) cryptocurrencies <a href="https://www.builder.news/project-review/optimism-op-a-layer2-scaling-solution-for-ethereum-applications" alt="Optimism (OP) - A Layer-2 scaling solution for Ethereum applications" title="Optimism (OP) - A Layer-2 scaling solution for Ethereum applications" target="_blank" rel="" class="">Optimism (OP)</a> and <strong>Metis (METIS)</strong> are constructed on top of Ethereum's blockchain to reduce congestion on the Ethereum mainnet. Several L2s are already operational, with <a href="https://www.builder.news/crypto-insights/arbitrum-the-mosttvl-layer-2-project" alt="Arbitrum - Story about most-TVL layer 2 project" title="Arbitrum - Story about most-TVL layer 2 project" target="_blank" rel="" class="">Arbitrum</a> being one of the most well-known. However, because of their token ecosystems' greater development, Optimism and Metis stand to gain more from bullish sentiment based on The Merge.</p><p dir="ltr">While L2s are not directly benefited by The Merge, they can gain some momentum because of their tight relationship with Ethereum. This is due to the attention economy effect, which in the world of cryptocurrency refers to the nebulous idea that whatever attracts the greatest attention also attracts the most capital. In fact, this month's gains for OP and METIS are both 50%.</p><p><em><strong>&gt;&gt;&gt; You might also concern:&nbsp;</strong></em><a href="https://www.builder.news/crypto-insights/top-layer2-projects-to-invest" alt="Top layer-2 projects to invest" title="Top layer-2 projects to invest" target="_blank" rel="" class=""><em><strong>Top layer-2 projects to invest</strong></em></a></p><h3>Infrastructure development protocol: Manifold Finance</h3><p class="prosemirror-p-center"><img src="https://lh4.googleusercontent.com/J0qWordMwLfs5OBOEuzUYarzqBlI6YkHPk2xipjyUU6N78Dy5YFEN1u12h9zWn4Gyhj6BIxwGADA1QYs48_0-jyWJoIWCWvpKLtweig6ttApKZGRTZcrgcdGzLeHrwlRiBZSdfO7gtspaYne0--W-kbsUr878oBfRpf-JDo5rMHiD_ppVUWGI8wQBQ" alt="Infrastructure development protocol: Manifold Finance" title="Infrastructure development protocol: Manifold Finance" width="624" height="289"></p><p dir="ltr"><strong>Manifold Finance</strong> is an infrastructure development protocol as well as a middleware protocol that separates block building and block validation into two separate operations. Currently, Ethereum miners are responsible for converting transactions into valid blocks and attempting to mine them using their hash power. However, after The Merge, separate entities will be able to simultaneously convert transactions into blocks and validate, leaving space for a new “block generator” stakeholder in the Ethereum validation sub-economy.</p><p dir="ltr">The protocol takes advantage of this by aggregating multiple endpoints while maintaining direct access to individual mining pools or validator nodes. The block generator helps validators find the most optimal blocks to validate and both parties profit from the interaction. Manifold earns revenue from providing services – which will be distributed to those who stake the protocol's FOLD tokens. After The Merge, Manifold's staking revenue will increase as more block makers and validators take advantage of the protocol's engine.</p><h3>MEV protection protocol: Eden network</h3><p class="prosemirror-p-center"><img src="https://lh3.googleusercontent.com/2NLHmTfAml3gvlc67EMTQembSAAbzmapnauE2E3ig5gIMAifsjz7HQ6g2kT7Gk7ugnYpGbkgWHyPX5SIALry1Q57XnDRa8-kCmbrSFK1bxtAZFJkFs2ES92Pa86fneKBmH2GIGO_1TjXNgB4QDn6qW583dkc2xKqtjTN-oxuNfAm72e2h2HrxL12lQ" alt="MEV protection protocol: Eden network" title="MEV protection protocol: Eden network" width="624" height="288"></p><p dir="ltr"><strong>Eden Network</strong> is a maximum extractable value (MEV) protection protocol that has a strong relationship with many prominent players in the Ethereum validating system. Through staking of the EDEN token, users are granted higher priority for their transactions and also have access to Eden Network's private forwarders.</p><p dir="ltr">As Ethereum moves to Proof-of-Stake, the core functionality that put the Eden Network on the map will disappear. However, after The Merge Eden will work with other protocols like Manifold Finance to increase block production efficiency while ensuring user transactions are secure. Additionally, Eden is building a new product to help maximize the profits that users can generate from staking tokens. After The Merge, Eden plans to implement its for-profit architecture on Ethereum, working with popular liquidity staking platforms like Lido and Rocket Pool to maximize returns for end users.</p><h2>Bottom lines</h2><p dir="ltr">Blockchain protocols function as the backbone of cryptocurrencies, and the rapid improvement of the entire blockchain know-how implies that new protocols sometimes hit the market. The upcoming The Merge event will affect protocols more or less. Above are some of the protocols that will benefit from this "historical event" according to the author’s opinion. However, nothing is certain yet. Let's look forward to The Merge and see what happens to protocols in particular and the market in general.</p><div class="pr-block-special"><strong>Disclaimer:</strong><br>This article is intended for and only to be used for reference purposes only. No such information provided constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific name.</div>

Ethereum will switch from a proof-of-work protocol to a proof-of-stake one this month. Thus, Ethereum may become a more appealing platform to build on and invest in with increased efficiencies and scalability solutions. Watch which protocols benefit the most from The Merge.