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Ethereum

As Ethereum Price Suffers, Investors Wonder If ETH Can Become Deflationary

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Ethereum has not been left out of the onslaught currently happening in the market. The Coin

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” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin has lost over 2.4% in the last 24 hours and is now trading in the $1,700 territory as of the time of writing this article. The digital asset continues to dip as the crypto market continues to experience massive losses.

Ethereum has now lost over 50% from its all-time high in April when the Coin

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” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin had shot past $4,000. Holders continue to remain bullish on the Coin

A coin is a unit of digital value. When describing cryptocurrencies, they are built using the bitcoin technology and have no other value unlike tokens which have the potential of software being built with them.

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” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin as upgrades promise new and exciting things in the future of the digital asset. The Coin

A coin is a unit of digital value. When describing cryptocurrencies, they are built using the bitcoin technology and have no other value unlike tokens which have the potential of software being built with them.

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” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin continues to experience growing anticipation in wait for the move to ETH 2.0.

Related Reading | Ethereum 2.0 Contract Reaches 100,000 ETH Milestone

But now a whole other question has arisen in regards to Ethereum, and that is if the digital asset will ever become deflationary.

Unlimited ETH Supply

Given the structure of Ethereum, it is not a stretch to say that the digital asset does not possess any hard cap. The network is structured that for every new block created, two ETH coins are produced. Then this means that as long as people continue to use the network, then more ETH coins will continue to be created.

An unlimited supply of any currency or asset puts that asset or currency at risk for inflation. Thus, Ethereum’s model remains an inflationary one due to there being no cap on the overall supply of ETH.

Related Reading | Ethereum Whales Go On Buying Spree, Top 10 Addresses Now Own 20% Of All ETH

This is currently the model that Ethereum runs on. But with the scheduled EIP-1559 network upgrade, this means that the network’s entire monetary policy might be changing.

The upgrade is meant to curb this inflationary problem. With the EIP-1559 comes a fee-burn mechanism. This mechanism will ensure that an estimated 30% of transaction fees generated will go to the miners or validators in ETH 2.0. Then the other 70% of the transaction fees will cease to exist, or in easier terms, the coins will be burned.

This means that instead of two new ETH coins being produced for each new block created and adding to the current Ethereum supply on the market, the base network fees will be going towards removing them entirely.

What This Means For Ethereum

This mechanism will reduce the number of new ETH coins coming into the market and getting sold. It will drastically reduce the supply of new coins, hence trying to make the digital asset deflationary.

This mechanism works and adjusts according to the current network activity at any given time and is dependent on block space. Given this, there is no way to tell how much Ethereum will be burnt over time after this mechanism is implemented.

Related Reading | How Ethereum Can Reach $2 Trillion In Market Cap, Matthew Sigel

In addition to this, the burn rate could end up being much higher than the issuance during times of high congestion. This, in turn, could end up leading to a liquidity crisis in the network as too much ETH gets burnt.

Holders of the digital asset remain unfettered by this though. Ahead of the ETH 2.0 complete upgrade, over 6.3 million ETH coins have been staked in the ETH 2.0 deposit contract. Representing over 5% of the current Ethereum supply locked ahead of the upgrade.

Ethereum price continues to trade below $2,000 | Source: ETHUSD on TradingView.com

Forecasts remain that this number will grow even more as the upgrade which is scheduled for 2022 is still a while away and this gives more investors time to get in on staking.

Holders have also staked about 9.34 million ETH in DeFi and are currently earning yield on various DeFi platforms from their staked ETH.

As the upgrade draws nearer, it is only a matter of time before it will be apparent how this will affect the monetary policy of Ethereum.

Featured image from Cryptocoin Spy, chart from TradingView.com

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Ethereum

‘Ethereum Improvement Proposal 3675’ for the Eth2 merge launches on GitHub

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A formal Ethereum Improvement Proposal (EIP) has been created for the network’s forthcoming chain merge, bringing Ethereum one step closer to realizing its highly anticipated proof-of-stake (PoS) transition.

On Thursday, ConsenSys researcher Mikhail Kalinin created a pull-request for EIP-3675 on GitHub, formalizing the chain merge as an improvement proposal for the first time. The EIP has also been slated for discussion during Friday’s Ethereum Core Devs Meeting by developer Tim Beiko.

Hard to overstate how valuable’s @mkalinin2‘s work on The Merge has been, and it’s finally being formalized in an EIP https://t.co/pNRerXFxVf

— Tim Beiko | timbeiko.eth (@TimBeiko) July 22, 2021

The proposal would merge the Ethereum and Eth2 chains, transitioning the network’s consensus mechanism away from proof-of-work and empowering stakers to validate transactions.

The EIP notes that no “safety nor liveness failures were detected” since the launch of Eth2’s Beacon Chain in December 2020, adding:

“The long period of running without failures demonstrates the sustainability of the beacon chain system and witnesses its readiness to start driving and become a security provider for the Ethereum Mainnet.”

Despite the EIP, many leading figures in the Ethereum community, including lead developer Vitalik Buterin, believe it is very unlikely the chain merge will occur in 2021.

The EIP comes amid bidding for the EIP-1559 Supporter NFT series, which was launched via Mirror on Wednesday. The nonfungible tokens demonstrate support for the introduction of a burn mechanism to Ethereum’s fees as part of the network’s coming London upgrades. All proceeds will be shared among 1559’s contributors, and the tokens were designed by artist Kitteh.

Since the launch of the Beacon Chain in December, Eth2 has emerged as the second-largest PoS network by staked capitalization in United States dollar terms, with $12.7 billion worth of Ether (ETH) locked in staking despite less than 6% of its circulating supply having been deposited.

According to Staking Rewards, Cardano has the largest staked capitalization with $24.2 billion and 62% of supply locked. Solana ranks third with $10.2 billion from 74%, followed by Polkadot with $9 billion from 63%.

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Ethereum Price Could Go Up Over 860% To Break $10,000, Crypto Analyst

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Ethereum value has taken some hits in the past few months as the Coin

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” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin has since significant losses in the price after the digital asset had hit its all-time high back in May. The price of ethereum had gone as high a $4,300, but the price has since crashed over 50% since then and now sits at less than $2,000 at the time of this writing.

Notwithstanding, crypto analyst and trader Kaleo predicts that the price of ETH is set to grow immensely in the next 12 months. The crypto analyst looks through movements of ethereum from back in 2017 and predicts that based on this, the digital asset is poised to experience a parabolic rally in its price.

Related Reading | As Ethereum Price Suffers, Investors Wonder If ETH Can Become Deflationary

The long-term price prediction from Kaleo puts the digital asset price at over $10k, following a major altcoins season. The analyst’s prediction puts the price of ethereum at well over an 860% increase in the second half of the year 2021.

Ethereum And Bitcoin Price Predictions For 2021

Taking to his Twitter, which remains his primary method of communication, Kaleo gave a couple of predictions regarding the prices of the top two digital assets in the space.

According to the crypto trader, the price of bitcoin was going to see another run-up that would put the digital asset in a six-figure discovery range. Joining the ranks of crypto analysts who have put the price of the number 1 crypto Coin

A coin is a unit of digital value. When describing cryptocurrencies, they are built using the bitcoin technology and have no other value unlike tokens which have the potential of software being built with them.

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” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin at $100,000 before the year runs out.

ETH price down over 50% since all-time high | Source: ETHUSD on TradingView.com

In line with this, Kaleo put the price of ethereum at a whopping $10,000, not minding the current bearish sentiments that continue to rock the markets as digital assets have continuously lost value amid sell-offs from investors.

The tweet further went on to predict more adoption from institutions and governments. While simultaneously calling out that there will be continuous FUDs from institutions and governments surrounding cryptocurrencies.

My predictions for the second half of 2021:

$BTC enters 6 figure price discovery
$ETH breaks above $10K
– We see one more major alt season
– More institutional / government adoption
– More institutional / government FUD
– Cryptunez gets a girlfriend
– Bears remain bearish

— K A L E O (@CryptoKaleo) June 17, 2021

Long-Term Predictions For 2022 To 2023

Kaleo, who uses the handle @CryptoKaleo on Twitter, posted a follow-up tweet containing even more longer-term predictions for the top crypto coins. The tweet included price predictions for both bitcoin and ethereum, and predictions for major regulations to follow. But unlike the first predictions for the second half of 2021, these predictions were much more bearish, explaining that prices would crash in this time period.

Related Reading | Ethereum Whales Go On Buying Spree, Top 10 Addresses Now Own 20% Of All ETH

My predictions for 2022/2023:

$BTC back down to ~$50K
$ETH back down below $1K
– Alts die again
– Bears who were bearish the whole way up from here to the top call for infinite clout
– Major regulation comes against crypto. People call Bitcoin dead again (it isn’t)

— K A L E O (@CryptoKaleo) June 17, 2021

Kaleo sees the price of ethereum falling over 90% after it hits its predicted $10,000 in the second half of 2021. Calling the price crash to be under $1,000 when this happens. Altcoins were also predicted to crash at this point, putting the general market at this point in a Bear

Bear market is defined as a decreasing set of prices for various types of assets. A bearish investor wants to profit from the movement of dropping prices. You can think of a bear, swinging his big paw downward on the investment, crushing prices.

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” href=”https://www.newsbtc.com/dictionary/bear/” data-wpel-link=”internal”>bear stretch.

Featured image from Forbes, chart from TradingView.com

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South Korea to take action against unregistered crypto exchanges

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The South Korean government announced today that crypto exchanges will face punishment if they have not voluntarily registered with the country’s authorities by September 24.

This new set of regulations will reportedly affect both exchanges based in South Korea and foreign exchanges that operate in Korean markets. According to the release, that includes any exchange where the Korean language is supported, marketing is geared toward Koreans, or payments can be made using the Korean won.

Under the Specific Financial Information Act, the punishment for exchanges that continue to operate without registration is up to five years in prison or a fine of up 50 million Won — roughly $43,500 USD. Sources suggest that there are plans to block websites belonging to unregistered exchanges in the future as well.

Related: Bank of Korea selects Kakao’s blockchain arm for digital won tests

Korean users should check on September 25 to see if the exchange they are using is registered to avoid any related penalties. As of that date, sales made through such exchanges would be illegal within the country.

This announcement is the latest in a string of regulations concerning cryptocurrency around the globe. Earlier this week, the European Union announced plans to crack down on the sending and receiving of cryptocurrency in the hope of limiting money laundering. The SEC Chairman said cryptocurrency falls under the rules and regulations of security based swaps in the US and noted that more regulation could be coming. A meeting from the President Working Group on Financial Markets and other US agencies also took place this week concerning the use and risks of stablecoins. Regulatory recommendations are expected to be delivered in the coming months.

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