Ethereum Always Strong, Thanks to Lower Upcoming Gas Fees and Staking

In July, the highly anticipated update of the EPI 1559 on Ethereum will start for the management of gas fees that we all know are very expensive.

Ethereum founder Vitalik Buterin said: “We are at a point where we are ready to include EPI1559 in a network update.”

In practice, the new system will dynamically and programmatically adjust commissions so that users pay only the lowest bid for each block.

Furthermore, a large part of the fees paid every day will be burned.

A study of 2020 data estimated that 1 Million Ethereum would have been burned in 365 days with this system, all of which equals almost 1% of the total supply.

Therefore there will be a continuous daily destruction of ether, resulting in a decrease in supply.

The incentive given by staking must also be added, which tends to decrease the working capital, as at the end of the year there will be the merger with ETH2.0, i.e. the transition from the current PoW (proof of work) to PoS (proof of stake).

If all this is useful for users, it will instead be very penalizing for Ethereum miners, but the community and the project will gain.

The picture on Ethereum is as follows:

  • it is programmable having the smart contract system
  • is the foundation of the DeFi world,
  • Staking and transition to Poof of Stake

All these elements will lead to a decrease in supply giving it a new deflationary character, very different from the bitcoin hard cap, but which could have similarities in its price and value behaviors.

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Wilbert Price

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