‘Ultra Sound Money’ — Post-Merge Stats Show Ethereum’s Issuance Rate Plunged After PoS Transition

Months before Ethereum went from proof-of work (PoW), to proof-of stake (PoS), a simulation by The Merge showed that the network's issuance rate would decrease following ruleset changes. Statistics show that the simulation's predictions were correct as the network's rate of issuance has decreased significantly since September 15, after the Paris Upgrade that triggered The Merge.

Ethereum's Issuance rate sinks post-merge

Ethereum's inflationary status has been transformed to deflationary since August 5, 2021 when the ruleset upgrade EIP-1559 was introduced. The change changed the algorithm that was tied to the base price per gas in the protocol. Since EIP-1559 has been codified, the base fee for each gas is now burned by the network. The network has destroyed 2,627.061 ether in the last eight years, which is $8.56 billion. Ethereum has been much more deflationary since The Merge. The change changed the protocol's issuance rates.

According to metrics on the website ultrasound.money, 3,076 Ethereum has been issued since September 15, according to data. If proof-of work (PoW), miners had produced 53,694 Ethereum since The Merge began on September 15. Current data shows that Ethereum has a 94% drop in issuance rates since The Merge. This is compared to if it had remained a PoW-network. ETH's deflationary properties are thought to be advantageous, since they make ether scarcer over time.

EIP-1559, Post-Merge Ruleset Modifications and EIP-1559: 4.6 Million fewer Ethereum by the Next Year

Current data from the Merge indicates that 297,000 ETH is likely to be burned annually at current rates. In addition, issuance has fallen from 3.78% per year to 0.22% to 0.25% each year. Prior to The Merge miners produced 4,931,000 ether annually. However, since the protocol was changed to PoS, annual issuance has fallen to 603,000 ether per annum.

At the time this article was written, ETH had a circulating supply totalling 120,583,249 ether. The aggregate value of the ETH assets at current exchange rates is $158.57 billion USD.

If Ethereum were to never merge, its total supply by September 19, 2023 would be approximately 125,514,249, excluding EIP-1559's burning rate. ETH's total supply should be around 120,889 249 by September 19, 2023, based on the burn rate and post merger rules. This is 4,625,000 ether less that it would have been under PoW consensus rules. Similar to Bitcoin's halving properties, ETH supporters believe that the aforementioned ruleset modifications will make ether more difficult than traditional sound currency, as proponents now prefer to call it ultrasound money'.

What do you think of Ethereum's issuance rates changing after The Merge and EIP-1559 were introduced last year? Please comment below to let us know your thoughts on this topic.

By: Jamie Redman
Title: ‘Ultra Sound Money’ — Post-Merge Stats Show Ethereum’s Issuance Rate Plunged After PoS Transition
Sourced From: news.bitcoin.com/ultra-sound-money-post-merge-stats-show-ethereums-issuance-rate-plunged-after-pos-transition/
Published Date: Mon, 19 Sep 2022 18:30:08 +0000

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