Ethereum has undergone a significant shift in its consensus mechanism, resulting in the reduction of its supply by 66,000 ETH in 2023. According to market intelligence platform IntoTheBlock, the change was brought about by Ethereum’s ‘Merge ‘transition to proof-of-stake (PoS) consensus, which occurred in September 2022.
In 2023, the supply of Ethereum reduced by 66k $ETH due to burning a fraction of transaction fees. This move has made Ethereum deflationary, which is great news for crypto enthusiasts seeking scarce digital assets. #Ethereum #deflation pic.twitter.com/2RuwiioffW
— IntoTheBlock (@intotheblock) March 18, 2023
With the new consensus mechanism, a fraction of the transaction fees on the Ethereum network is being burnt, making it a deflationary currency. This is different from inflationary currencies, where the supply of currency increases over time. This move is seen as attractive to crypto enthusiasts who value scarce digital assets and believe that scarcity can drive up their value.
Another significant upgrade to Ethereum, known as the Shapella upgrade, is scheduled to go live on April 12, 2023. The most notable feature of this upgrade is Ethereum Improvement Proposal (EIP) 4895, which introduces validator staking withdrawals to the main network. This feature was left out during Ethereum’s shift to PoS consensus in September last year, following the Merge upgrade.
The price of ETH has been on an upward trajectory, hovering around $1,816.52 per coin at the time of writing. In the last 7 days, the asset has registered a solid growth of 26%. Moreover, this increase in value is attributed to the scarcity of deflationary currency, attracting investors seeking rare digital assets.
The reduction in the supply of Ethereum will have far-reaching implications for the cryptocurrency market. The deflationary nature of Ethereum makes it a scarce asset, which in turn, attracts investors looking for rare digital assets. The Shapella upgrade, with its introduction of validator staking withdrawals, will make Ethereum more accessible to a wider range of investors.