• The total supply of Ethereum (ETH) decreased in January, resulting in a net deflationary value of $16 million.
• The Ethereum network underwent a significant change with the finalization of the Merge, moving it from proof-of-work (PoW) to proof-of-stake (PoS).
• The Merge has since reduced energy consumption by almost 100%, paving the way for sharding to enhance Ether’s scalability in a future hard fork.

In January of 2021, the total supply of Ethereum (ETH) decreased, resulting in a net deflationary value of $16 million. This shift in the cryptocurrency’s supply and demand dynamics is significant, as it suggests a trend towards increased scarcity and higher market value in the future. The impact of this change on the Ethereum market and its stakeholders is worth paying attention to for anyone interested in the cryptocurrency industry.

The Ethereum network underwent a significant change in September of 2022 with the finalization of the Merge. This transition moved Ethereum from proof-of-work (PoW) to proof-of-stake (PoS), bringing several benefits to the network. PoW miners previously issued around 13,000 ETH in daily block mining rewards, but post-Merge, stakers receive only around 1,700 ETH in daily tips, resulting in an 87% reduction in issuance.

The Merge has since reduced energy consumption by almost 100%, paving the way for sharding to enhance Ether’s scalability in a future hard fork. Base fee burns enable a daily net reduction in supply depending on network usage. The busier the network, the more base fees are burned. For burned base fees to exceed 1,700 ETH and result in a net decrease in supply, the network must have a minimum activity of 16 Gwei daily.

The periods of supply inflation could be seen in the past, however, the deflationary value of Ethereum is likely to remain strong in the years to come. As the demand for Ethereum grows, the limited supply will become an increasingly scarce resource, increasing its value in the cryptocurrency market. This trend will likely have a positive impact on Ethereum’s stakeholders, as increased value could lead to increased profits and benefits.