Gauging Ethereum’s [ETH] increasing deflationary pressure amid Shapella preparation
With about two weeks left until the Shanghai-Capella hard fork, Ethereum’s [ETH] supply has continued to diminish. According to Delphi Digital, the altcoin’s supply has fallen off by 70,000 ETH since it transitioned to the Proof-of-Stake (PoS) consensus mechanism.
<p lang=«en» dir=«ltr» xml:lang=«en»>Ethereum's supply has decreased by more than 70,000 $ETH since The Merge. pic.twitter.com/RDkg5oCp9e— Delphi Digital (@Delphi_Digital) March 28, 2023
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This increase meant that the number of Ether entering circulation was lower than those being burned. For context, scarcity in the supply of an asset is bound to increase its value in the long term. This, sometimes, draws investor attention to the asset.
However, the crypto community was aware ETH’s supply would decrease after the Merge. It was expected, as the burning of transaction fees was one condition for the PoS switch.
In 2021, the projection was that ETH issuance would reduce by 2% yearly. But the supply has been decreasing at an unexpectedly rapid rate. At the same time, projections of a slow deflationary status were only supposed to occur in the early stages of ETH 2.0.
Nonetheless, since staking withdrawals are expected to resume by 12 April, it means that the ETH 2.0 was near. Ethereum could now edge toward full-scale deflation pressure.
Meanwhile, the deposit rate on ETH 2.0 has significantly tumbled after registering notable spikes in January and February. At press time, Glassnode’s data showed that the number of new deposits was around 800.
Source: Glassnode
It implied that the validators who were faced with contributing 32 ETH to the ecosystem were restricting extra input.
Furthermore, Ethereum developer Tim Beiko
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