2023-12-13 08:02:59
By Ultrasound Money published recent analysis once more highlights that What changes have occurred in Ethereum’s economic model since the “Merge” took place in September 2022. This was the event when the network switched to a proof-of-stake consensus mechanism. By definition, the biggest change is the deflationary effect.
Ether is burning and transaction activity is also increasing
The drop in Ethereum supply is over 300,000 ethers, while previously a continuous expansion was typical. The main reason for the decrease in supply is the burning of nearly 1.2 million ether. This continuous burning mechanism therefore greatly contributes to reducing the supply and preserving the scarcity of ether. And since around 885,000 ethers were issued during this period, it can be seen that the trend is a continuously decreasing supply. Currently, the total available supply of Ethereum is around 120 million Ether, which is worth over $260 billion – so Ethereum is still a dominant force.
dApps and other service providers, such as Uniswap, Tether and OpenSea, mostly contribute to the burning of ETH. Uniswap’s role in burning ether is also large because the platform handles a high transaction volume in the DeFi sector. Tether’s role in burning points to how many stablecoin transactions are taking place on the Ethereum network. And the role of OpenSea shows the ability of NFTs to withstand time in a bear market. But if you look at the biggest ether “burners”, you can see how widely used the Ethereum network is.
And if the deflation mechanism continues, even more people will be able to turn to ether, especially from the direction of inflation-stricken fiat money. Interestingly, in the current proof-of-stake (PoS) model, the Ethereum network has burned an average of 1.83 ether per minute since the merger. However, if you look at it since the burning mechanic was introduced as part of the EIP-1559 update in August 2021, the average burning rate has almost doubled, at 3.09 ETH/min. In summary, Ethereum’s post-merger statistics indicate a significant shift towards a deflationary regime. This is also shown by the increased value due to high network usage and decreasing supply.
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