There are currently over 118 million ETH in circulation, and while there is no upper limit on supply for the cryptocurrency, don’t expect the number to get any higher. According to simulations by the ETH tracker Ultrasound Money, the supply of Ethereum could decrease after the PoS transition and is expected to decrease by 2% annually, and if this rate stays the same, the blockchain will start burning every new block. At the beginning of August, ETH developers pressed the “Start” button on the biggest blockchain upgrade of all time. The London Hark Fork and EIP-1559, an ETH improvement proposal, increased the block sizes to combat network congestion and crush transaction fees instead of sending them to miners.
The aim was to put deflationary pressures on assets six times the amount in circulation than Bitcoin, and this has been achieved. According to statistics from Watch the Burn, ETH spending has declined by about 57% so far, with more than 1.1 million coins being given out as block rewards to miners and 630,000 coins being released. As ETH is transitioning to ETH 2.0, deflationary pressures can translate into deflation. ETH relies on miners to validate and process transactions like BTC.
While the proof of stake already exists in the ETH beacon chain, it still has to merge with the proof of work chain. In this case, the threshold for achieving deflation and decreases Tim Beiko “With each block, more ETH is produced, except when there is a high bottleneck, when gas prices rise to 150 gwei,” said the work coordinator of the ETH core developers. Beiko added:
“The reason for this is that the staking reward is 5-10 times lower than that [proof-of-work] reward. At the moment we receive 2 ETH issues in every publication [proof-of-work] Block. But the Beacon Chain release is only a small part of that … so after the merger we just have to make up for that to deflate the air. “
https://twitter.com/TimBeiko/status/1453098860214054915?ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow noopener
In other words, after proof of the share, less ETH will be created with newer blocks, and if usage remains stable as measured by gas prices, there will be less eTH at the end of the year. It is not possible to determine the exact threshold as we do not know how many people are betting on the network.
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