Recent reports indicate that Ethereum has experienced a significant change in the reduction of its supply by 66,000 ETH, marking a historic milestone for the cryptocurrency. The market intelligence platform, IntoTheBlock, has confirmed that this is due to a portion of the ETH transaction fees being burned as a result of Ethereum’s transition to proof-of-stake (PoS) consensus, which occurred in September 2022 as part of the ‘Merge’ upgrade.
The new consensus mechanism at Ethereum brought about a deflationary currency that has seen a decrease in the supply of currency over time, resulting in an increase in its purchasing power. In contrast, an inflationary currency sees an increase in the supply of currency over time, causing a decrease in its purchasing power. Deflationary currencies are especially appealing as they are considered scarce digital assets, making them an attractive investment opportunity for crypto enthusiasts.
Moreover, the scarcity of digital assets is known to be a driver of the asset’s value, which makes Ethereum even more appealing. It is worth noting that another eagerly anticipated upgrade for Ethereum, the Shanghai-Capella upgrade, also known as the Shapella upgrade, is scheduled to be launched on April 12, 2023.
One of the significant components of this upgrade is Ethereum Improvement Proposal (EIP) 4895, which will introduce validator staking withdrawals to the main network. The feature was not included during Ethereum’s shift to proof-of-stake (PoS) consensus in September 2022, following the Merge upgrade.
Apart from the supply reduction, the price of ETH is also making significant progress at present, with its value having risen by 26% over the last seven days. Currently, the coin is valued at around $1,816.52 per coin. This is great news for crypto enthusiasts seeking scarce digital assets as Ethereum is now deflationary.
In summary, Ethereum’s transition to proof-of-stake (PoS) consensus has seen its supply reduced by 66,000 ETH, making the currency deflationary. Though the reduction of its supply is just one of the impressive features of this move, it has created a significant milestone in the cryptocurrency world. Deflationary currencies have become especially appealing as they are considered to be scarce digital assets, making them an attractive investment opportunity for crypto enthusiasts.
