The ‘Merger’ is here and what to expect from the forthcoming merger of the top smart contract platform is revealed in a new study from cryptocurrency analytics company IntoTheBlock. According to a well-known market intelligence company, after the top altcoin switches to a proof-of-stake system, the quantity of Ethereum (ETH) released every block would drastically fall.
The transition of ethereum
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to proof-of-stake (PoS) has been 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 a while. The number of ETH issued every block will drop by 85%-90% as a result of the merge, which is one of the most significant repercussions.
This decrease, according to intotheblock
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, is the same as Bitcoin’s (BTC) value halving three times at once. The reward for mining a token is reduced by half during a halving. According to IntoTheBlock, this will result in Ethereum miners becoming a thing of the past, removing $20 million to $25 million in supply pressure off 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 merge, ETH supply is probably going to briefly decline. As the anticipated event is likely to generate volatility and speculation, burning more ETH in the process, transaction fees are projected to rise in the hours and days following the merge. However, ETH will be only slightly inflationary if Ethereum fees return to their 30-day average.
“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.”