Renowned Bitcoin (BTC) mining veteran Jiang Zhuoer explains how The Merge and EIP-1559 together can affect Ethereum economics
Mr. Jiang Zhuoer is the CEO of the leading Bitcoin (BTC) mining pool, BTC.TOP. Now defunct, it was in the top 10 mining pools by hashrate. Today, Zhuoer shared his estimate of the upcoming Ethereum (ETH) “supply shock”.
EIP-1559 + Ethereum 2.0: Combo for Ethereum?
According to Mr. Jiang Zhuoer, the implementation of EIP-1559, which allowed Ethereum (ETH) to partially destroy transaction fees, has already reduced its supply dramatically.
According to his estimates, the implementation of EIP-1559 is as influential as a Bitcoin (BTC) halving. However, the strongest catalysts for the second cryptocurrency are yet to come.
Namely, once Ethereum (ETH) migrates to a proof-of-stake (PoS) model, its liquid supply will undergo a 100-200% more impressive shock. Its exact impetus will depend on how many Ethers will actually be stacked in the ETH2 deposit contract.
At press time, despite the correction in the price of Ether (ETH), the net worth of the Ethereum 2.0 deposit contract is approaching $35 billion in equivalent. Depositors have locked 11.8 million Ether so far.
Is “flippening” finally coming?
This combination will make Ethereum really scarce in effect, Mr. Jiang Zhuoer supposes:
The combination of EIP-1559 and ETH 2.0 would generate a magical chemical reaction – true deflation. In terms of total supply, Ethereum decreases as more ETH is burned every day, making Ethereum superior to Bitcoin with a fixed total supply.
Also, many Ethers (ETH) are locked in decentralized finance applications, staking protocols, liquidity providing modules and so on. As such, the number of bullish catalysts for the second crypto increases every day.
While the supply of Bitcoin (BTC) is fixed and its issuance only decreases once every four years, Ethereum (ETH) could eclipse it by market capitalization due to rising prices.
