The ‘merger’ is here and what to expect from the upcoming merger of the top smart contract platform, reveals a new study by cryptocurrency analytics company IntoTheBlock. According to a well-known market intelligence company, the amount of Ethereum (ETH) issued per block will see a huge drop after the top altcoins switch to the proof-of-stake system.
Ethereum’s transition to Proof-of-Stake (PoS) is highly anticipated for a number of reasons and will happen soon. The Ethereum network and the asset Ether are expected to benefit from this upgrade, which has been in development for some time. The merger will result in an 85%-90% drop in the number of ETH issued per block, which is one of the most significant repercussions.
According to IntoTheBlock, this reduction is tantamount to halving the value of Bitcoin (BTC) three times in one go. The reward for coin mining is cut in half during the halving. According to IntoTheBlock, this will result in Ethereum miners becoming a thing of the past, removing $20 million to $25 million under supply pressure from the market.
Will ETH supply decline?
The crypto intelligence company also claims that due to an increase in transaction fees, ETH may become slightly deflationary after its transition, though it also points out that it could go either way.
Following the merger, the ETH supply is likely to decline for some time. As the anticipated event is likely to generate volatility and speculation, trading fees are expected to rise in the hours and days following the merger, burning more ETH in the process. However, if Ethereum fees return to their 30-day average, ETH will only be slightly inflationary.
“For these reasons, the most up-to-date projections for ETH inflation following the merge are between -1% to +0.5%. These figures are lower than previous projections given that transaction fees have dropped 75% over the past three months.”
