Due to an increase in network activity, this Thursday, November 10, more than 3,000 ETH were burned. Currently, 71% of Ethereum validators comply with OFAC regulations.
Almost two months after The Merge update, Ethereum is no longer issuing tokens. Its status as a deflationary currency and “Ultra Sound” is therefore indisputable, but its price has fallen by more than 18%.
“Can cryptocurrencies make me a millionaire? Yes, if you’re a billionaire”. If you follow the crypto community on Twitter, you’ve probably seen this meme making the rounds since the FTX crash.
In a matter of hours, the market capitalization of the crypto market fell below the $800 billion mark, a loss of 14%. For investors, the day after the FTX crash was a disaster by any measure. However, here is something that might cheer you up.
While all eyes are on the FTT course, do you remember Ethereum and its The Merge update that was released on September 15? Haven’t you forgotten ETH’s transition from the Proof-Of-Work (PoW) execution layer to the Proof-Of-Stake (PoS) Beacon Chain consensus layer, also known as ETH 2.0?
The Merge: ETH Becomes Deflationary
On September 13, a few hours before The Merge, BeInCrypto released a report on the impact of this long-awaited transition. Today, almost two months later, we take a look at this update that changed everything about Ethereum.
In short, The Merge has changed the issuance model and supply of ETH. “Previously, ETH tokens were issued from two sources: the execution layer (mainnet) and the consensus layer (Beacon Chain). Since The Merge, the broadcast in the runtime layer has gone to zero.
After The Merge, Ethereum became an ultra-strong and deflationary currency, which means that it is in limited supply; in other words, its purchasing power increases over time, because new coins/notes are not issued, as they develop resilience against sudden price increases, as well as against long-term declines in purchasing power.
Ethereum: an “Ultra Sound” Coin
After introducing a fee reduction mechanism with the EIP-1559 update, Ethereum has become, according to its proponents, an Ultra Sound coin, an asset whose total supply decreases (deflation) and increases in value over time. This will allow investors to generate a 4-5% return (currently 4.3%) on Ethereum stakes.
However, one major issue that could arise is the censorship of Ethereum. In fact, the MEV Watch platform reveals that some MEV (Maximum Extractable Value) enhancement software is regulated by OFAC (Office of Foreign Assets Control), meaning it can censor certain transactions if authorities deem it necessary.
Currently, 71% of Ethereum blocks comply with OFAC regulations. A figure that has increased considerably compared to the end of September when it did not exceed 25%
By Audy Castaneda
