deflationary currency

Ethereum (ETH) is eyeing $3,000 as the second-largest cryptocurrency by market capitalization is trading at $2,714 at the time of writing, according to CoinMarketCap.

Lark Davis believes that Ethereum will have cemented its status as a deflationary currency because its value will continue increasing with time. The market analyst explained:

“By the end of the year, Ethereum will be deflationary and running on proof of stake. A Fundamental economic shift is coming for ETH.”

Davis added that a paradigm financial shift is on the horizon for Ethereum. For instance, he recently pointed out that ETH attained its highest daily close after breaching the $2.500 price.

Ethereum is also a stone’s throw away from surpassing Paypal’s market capitalization of $318.33 billion, as its current market cap sits at $314.47 billion.

TVL of ETH 2.0 breaches $10 billion

According to crypto insight provider Bloqport, the total value in ETH 2.0 deposit contract surged past $10 billion with 3,994,722 ETH deposited.

Ethereum 2.0 went live in December 2020, and it seeks to change the current proof-of-work consensus mechanism to a proof-of-stake framework, which is touted to be more environmentally friendly and cost-effective.

The proof-of-stake algorithm allows for the confirmation of blocks to be more energy-efficient and requires validators to stake Ether instead of solving a cryptographic puzzle. Additionally, Ethereum’s transition to a proof-of-stake model will allow the blockchain to see enhanced upgrades, including sharding, which would improve scalability.

Davis, therefore, believes that the proof-of-stake consensus mechanism will be running by the end of the year.

Ethereum on-chain transactions go through the roof

IntoTheBlock has acknowledged that large investors are behind ETH’s rally, making on-chain transactions go through the roof. The data analytic firm noted:

“Yesterday’s ETH rally was driven by large investors. The volume transacted in on-chain transactions greater than $100k reached its highest value ever. The volume of these large transactions reached $20.95b yesterday, and more impressively, it was 91% of the total on-chain volume.”

Moreover, ETH settled transactions worth $1.5 trillion in the first quarter of 2021 compared to $1.3 trillion in 2020.

Ethereum (ETH) continues to be the talking point in the crypto community after the London Hardfork or EIP 1559 upgrade going live on August 5. As a result, the first-ever deflationary block on the Ethereum network happened.

The Ethereum network is anticipated to gain steam based on this development. ETH is set to become deflationary, given that its value is expected to continue increasing with time on the foundation of slashed supply.

Eradicating inflationary tendencies on the ETH network

With the London Hardfork going live, the ETH network will set a base fee for every transaction carried out, giving all a fair opportunity.

Users who may wish to conduct their transactions faster than the standard provisions of the network can add a tip to validators to fast-track their transactions. Part of this tip is burnt, helping to improve the monetary policy of the Ethereum network as a whole.

Furthermore, this upgrade will eliminate using other digital tokens for payment of fees in the Ethereum Network. Only Ether will be used, thus restoring the unique relevance of the ETH cryptocurrency.

Scarcity will be introduced every time Ether is burnt after being used in transactions. This feature will help in eliminating inflationary tendencies that the network was accustomed to before.

Ethereum shorts worth $211 million liquidated

According to Moskovski CIO, Lex Moskovski:

“ETH bears got burned. $211M of ETH shorts have been liquidated in 24h.”

Furthermore, a recent surge above $2,700 for the first time in 2 months triggered crowd euphoria in the Ethereum ecosystem. Therefore, social volume played a significant role in this spike.

The second-largest cryptocurrency based on market capitalisation was up by 5.51% in the last 24 hours to hit $2,780 during intraday trading, according to CoinMarketCap.

Ethereum is also emerging as one of the sought-after networks in the crypto space because it accounts for nearly half of the trading volume on top exchanges.

With the London Hardfork upgrade already in place, whether this will boost Ethereum’s upward momentum remains to be seen.

Tag: deflationary currency

Ethereum Will Be Deflationary and Running on Proof-of-Stake by Year-End, says Market Analyst

Ethereum is Set to Become Deflationary after the London Hardfork Went Live