Thanks to burning mechanism, Ethereum is slowly turning into profitable network
Prior to the continuous lack of merge updates and issuances, Ethereum has been an “unprofitable” blockchain, like any cryptocurrency network on the market. Although the situation has been Changed,
The “profitability” of a blockchain is not the same as the profitability of a company in traditional finance. Technically, the subtraction of new issuance from fee burns is what allows us to determine whether the network is profitable or not.
To be precise, Ethereum also remains the only deflationary asset from the top 10 of the crypto market. The profitability of the blockchain does not benefit its holders or new investors. On the other hand, deflation can be considered as a strong speculative growth factor for the cryptocurrency in the future.
By forcibly decreasing the supply of the asset, third parties or decentralized machines might create a supply shock in which the lack of supply and elevated demand causes the price of an asset to reach extreme values.
While Ethereum’s rally will bring prosperity to investors and traders, dApp users and developers will have no choice but to transact with high fees and potential network congestion. Unfortunately, during times of high network load, Ethereum forces users to pay up to $15 per operation on the network.
However, various foundations and projects are constantly working on Ethereum’s scalability by offering new mechanisms for processing transactions or alternative Layer 2 networks that take some of the load off the main network, offering higher throughput, lower processing times and insignificant fees.
At press time, Ethereum remains deflationary, but as the burn rate decreases, the network’s leverage is moving back to $0.