The CEO of $4,700,000,000 Crypto Asset Manager Says Ethereum Will Upcoming Upgrade an 'Interesting Outlook' - Here's Why
Pantera Capital CEO Dan Morehead is highlighting the benefits of Ethereum (ETH) moving to a proof-of-stake (PoS) consensus mechanism.
In Pantera's latest Blockchain Letter, the crypto-focused hedge fund's top executive explains that one consequence of the network's upcoming Merger will be the removal of miner rewards. and thus the daily release of new ETH from 14,600 down to 1,600 tokens.
According to Morehead, this will turn the leading smart contract platform into a deflationary asset.
“After ‘The Merge’, Ethereum’s 1,600 ETH/day issuance rate in staking rewards minus fees is gone. Minus the penalties incurred by validators (e.g. getting slashed for misbehavior) and ETH lost over time, which would make Ethereum issuances negative.
In today's inflationary landscape, Ethereum's move towards a deflationary asset is an interesting prospect. ”
The newsletter continues to discuss how the transition away from Proof-of-work (PoW) will make the project more environmentally friendly.
“Moving to proof of stake will have a major impact on Ethereum sustainability with an estimated 99.95% reduction in energy consumption – clearly a huge improvement from an environmental, social, and governance standpoint.” (ESG).
The 99.95% reduction in energy will come from Ethereum's transition away from Proof-of-work - a process that uses electricity and hardware as the primary cost of securing the network.
In a proof-of-stake system, the main cost of securing the network is capital in the form of a stake token, and it doesn't require much electricity at all.”
Just this week, the Ethereum Foundation provided a detailed update on Merge's timetable. This process will be initiated in phases, starting with the Bellatrix upgrade on September 6, followed by an official transition sometime between September 10 and 20.
Consolidation aims to solve network scalability issues by setting the stage for future upgrades, including sharding.
Ethereum recovered slightly midweek after falling from above $1,850 over the weekend. ETH is up 8.3% in the past 48 hours and trades for $1,701.
Pantera Capital is currently involved in 100 ventures and has $4.7 billion in assets under management.
Aug 26, 2022