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- According to IntoTheBlock, the supply of Ethereum has decreased by 66K ETH due to the switch to PoS consensus.
- A deflationary currency reduces supply, increases purchasing power, and attracts crypto enthusiasts.
- The Shanghai-Capella update is scheduled for April 12 to introduce validator staking withdrawals.
Market analytics platform IntoTheBlock reported that in 2023, the supply of Ethereum was reduced by 66,000 ETH, which was a historical milestone.
In 2023, the supply of Ethereum reduced by 66k $ETH due to burning a fraction of transaction fees. This move has made Ethereum deflationary, which is great news for crypto enthusiasts seeking scarce digital assets. #Ethereum #deflation pic.twitter.com/2RuwiioffW
— IntoTheBlock (@intotheblock) March 18, 2023
This was due to Ethereum moving to Proof-of-Stake (PoS) consensus in an event known as the “merger” that took place in September 2022. With the introduction of a new consensus mechanism, some of the ETH transaction fees are now burned, causing Ethereum to become a deflationary currency.
Deflation is expressed in a decrease in the supply of a currency over time, which leads to an increase in its purchasing power. On the contrary, an inflationary currency increases the supply of the currency over time, which leads to a decrease in its purchasing power.
Moreover, deflationary currencies are particularly attractive as they are considered scarce digital assets. This scarcity is seen as the driving force behind the value of the asset, making it an attractive investment opportunity for crypto enthusiasts.
It is important to note that another long-awaited update for Ethereum, called Shanghai-Capella, also known as the Shapella update, according to the developers, will be launched on April 12, 2023.
One important component of this update is the Ethereum Improvement Proposal (EIP) 4895, which will introduce validator staking output to the mainnet. This feature was not enabled during Ethereum’s transition to Proof-of-Stake (PoS) consensus in September 2022 after the Merge update.
Currently, the price of ETH is hovering around $1781 per coin. Over the past seven days, the value of the asset has increased significantly, increasing by 20%.
#Ethereum #supply #fell #ETH