Ethereum: The StETH Peg Is The Wrong Arbitrage Play

The much anticipated merge of Ethereum's mainnet and the PoS Beacon Chain is scheduled for mid-September.There are some who are wondering if the Lido Finance stETH derivative is the best way to play the merge because of the peg discount.I think there is a better alternative for arbitraging Ethereum.When I last covered Ethereum (ETH-USD) a little over a month ago, a key component in the long-awaited Proof of Stake chain merge had been delayed. Out of a desire to not re-write that article, for those who pay less attention to the technical aspect of blockchains: Ethereum is primarily a PoW (Proof of Work) consensus blockchain. However, there is a parallel Ethereum chain already that runs a PoS (Proof of Stake) consensus instead. The PoS chain is called the Beacon Chain. What developers and market participants have been waiting to see completed is the joining of Ethereum's PoW mainnet with the PoS Beacon Chain. The completion of which has been referred to as "The Merge." The Merge now has a new target date of September 19th.Lido Finance ArbitrageA major part of transitioning to a Proof of Stake mechanism requires ETH validators to stake their assets before the merge is actually completed. This helps to secure the Beacon Chain pre-merge as mainnet validators currently have a vested interest in mining on the proof of work chain. Following the merge, there will be no incentive for proof of work mining. Thus, staking ETH on Beacon Cha...