Ethereum (ETH) Concerns Resolved Before Consolidation
Ethereum [ETH] has been attracting interest from much of the crypto community lately. This is mainly due to the upcoming release of Merge. However, the transition to Proof-of-Stake (PoS) has also led to intense questions surrounding the issuance of ETH.
A recent analysis from Glassnode tackles the conundrum surrounding Ether issuance under two possible scenarios.
What do we know?
The first scenario requires the issuance of ETH on both PoS and PoW chains along with the burning of EIP-1559, which is usually an inflationary process. The second briefing called for ETH to be issued on PoS and passed recording EIP-1559 demonstrating a more deflationary stance on the network.
According to WatchTheBurn.com, over 37,170 ETH has been destroyed under EIP-1559 in the last 30 days alone. A recent Bankless newsletter said that Ethereum will become inflationary under EIP-1559 with a net inflation rate of 1.26-2.66%.
However, Bankless also suggests that when Ethereum moves to staking via PoS, its inflation rate could reach -1.05%. Hence, making it deflationary.
It is important to note that in August 2022, the average gas price is around 20 Gwei. If The Merge introduces increased fee pressure, the net supply of ETH after the Merge is likely to decrease.
But now everything is not ok
A large part of the crypto community believes that ETH price will increase after the Consolidation. An analyst of CryptoQuant pointed to the possibility of a decline in the price of ETH as mentioned recently.
According to this analyst, who goes by the name Grizzly, ETH's exchange reserves have increased over the past few days. As previous data shows, such an increase in the inflow of money into exchanges is often followed by a decline in prices.
Sep 07, 2022