On-chain statistics indicate that the daily issuance of Ethereum has been dramatically reduced since the Merge, indicating that the asset is on its road to becoming deflationary.
UltraSound Money research indicates that Ethereum’s issuance rate has decreased by 98% after the Merge.
Since the switch, the network’s supply has increased by 7,385.47 ETH, when it would have increased by 128,422.13 ETH if it were still using the Proof-of-Work (PoW) consensus mechanism.
Over the last 24 hours, the ETH supply has increased by 0.34 percent. Under PoW, the rate would have been 3.86% for the same time frame.
Some have suggested that the drop in token supply is not solely attributable to the move to PoS. This move has been ascribed to less traffic on the Ethereum network, resulting in cheaper gas costs.
However, network activity decreased prior to the Merge, and more ETH tokens were still produced through PoW.
However, Ethereum is not yet deflationary, since the total number of tokens issued is still more than the total number of tokens burnt. The supply continues to increase but at a relatively modest rate.
Over the previous day, around 519 ETH were burned. However, the network issues around 772 ETH tokens every day.
Arthur Hayes, a co-founder of BitMEX, said that he does not think Ethereum must become deflationary after the Merge. According to him, Ethereum’s aspiration to become a “decentralized computer” might be hindered by a significant price increase. He emphasized that the emphasis should be on reducing Ethereum’s inflation after the integration.
If its demand stays modest, Lucas Outumoro, the director of research at IntoTheBlock, anticipated that ETH might be somewhat inflationary following the integration.
Ethereum’s price continues to perform badly despite a substantial fall in its issuance pace. It is trading at just over $1,300 following a 9.6% decline over the last week.
All of the modest gains Ethereum accumulated before the Merge have been wiped out. The last time ETH traded at such a low price was in July, after the crypto market crisis.
Several experts had projected that the asset’s price performance would increase after the Merger’s completion. However, Ethereum’s price has been mostly negative since the transfer, falling almost 20% since the day of the integration.
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