A few months before Ethereum transitioned from proof-of-work (PoW) to proof-of-stake (PoS), The Merge simulations showed that with the rule set change indicated that the network’s issuance rate would decrease. Statistics revealed that after September 15, after the Paris Upgrade that triggered The Merge, network issuance rates dropped significantly and the simulation predictions came true.
Ethereum’s issuance rate drops after The Merge
After August 5, 2021, Ethereum introduced a ruleset upgrade, changing from inflationary to deflationary, introducing EIP-1559. Essentially, this change reconfigured the algorithm tied to the base price per gas in the protocol, and since EIP-1559 was codified, the network now burns the base price per gas.Since the London upgrade on August 5, the network has broken2,627,061 ether, worth $8.56 billion. However, since The Merge, ethereum is more deflated because changes have redefined the protocol’s issuance rate.
For example, the web portalultrasound.moneyindex shows 3,076ETHissued since The Merge on September 15. If proof-of-work (PoW) miners were still mining ether, they would have produced 53,694 ether since The Merge began. Current data shows that the post-Merge ethereum issuance rate is more than 94% lower than if the blockchain had remained in the PoW network. The deflationary properties of ETHare considered beneficial because they increase the scarcity of Ether over time.
EIP-1559 and post-merger rule set changes will result in 4.6 million fewer ethers by next year
Currently, post-merge data shows that 297,000ETHare consumed annually at the current rate, with issuance dropping from 3.78% to 0.22%-0.25% per year Prior to The Merge, miners were producing 4,931,000 ether per year production, but since the change in protocol to PoS, annual issuance has slid to a new low of 603,000 ether.
At the time of writing,ETHhas a circulating supply of 120,583,249 ether, which at the current exchange rate is equivalent to a total USD value of $158.57 billion.
This means that if Ethereum is not merged, by September 19, 2023, the total supply will be about 125,514,249 without considering the EIP-1559 burn rate. Under the burn rate and post-Merge rules,. the total supply of ETHby September 19, 2023 should be an estimated 120,889,249, or 4,625,000 ether less than under the previous PoW consensus rules. Similar to Bitcoin’s semi-declining characteristics,ETHsupporters believe thatETHsupporters believe that the aforementioned rule set changes will make Ether, as recent supporters like to call it, “ultra-sound money,” sound more conventional We believe it will be stiffer than money.
Image credits: Shutterstock, Pixabay, Wiki Commons, Ultrasound.money stats.