Ethereum ($ETH) ‘May Be Headed Towards Deflation’

According to a Citi research study published on Monday (31 October 2022), Ethereum ($ETH) is on its path to becoming a deflationary asset after the Merge.

Merge, which was completed on 15 September 2022, signified the move from proof-of-work (PoW) consensus to proof-of-stake (PoS) consensus on the Ethereum network. Vitalik Buterin, the developer of Ethereum, referred to this successful update as “a momentous day for the Ethereum ecosystem”.

According to a report published by CoinDesk earlier today, experts headed by Joseph Ayoub said the following regarding $ETH in research dated 31 October 2022:

“Ether seems to be going toward a deflationary future since it demonstrates episodes of deflation in conjunction with low network activity.”

The CoinDesk report continued: “According to Citi, PoS has reduced the supply of Ethereum by 564,000 in the six weeks after the Merge, compared to what it would have been had PoW issuance continued. In dollars, this equates to around $870 million. Annualized, that translates to a decrease of around $7.7 billion in active ETH supply as a result of the switch to PoS.”

Anthony Sassano, an independent Ethereum educator, investor, and adviser, discussed how Ethereum’s Merge upgrade influenced the net issuance of $ETH on 26 October 2022.

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