An analysis of the supply shock of ETH: EIP-1559, ETH pledge and the merger of the old and new chains

Edit: Southwind

Edit: Southwind

We all know that sinceEIP-1559Since its implementation in early August of this year, a large number of ETHs have been destroyed in the past 6-7 weeks (the number of ETHs destroyed at the time of writing and more than 345,000), but I have not seen the impact of this destruction on Ethereum miners. data. As shown below,image description

Image source: https://dataalways.substack.com

 EIP-1559It's not the only supply shock miners will face. In fact,Once the Eth1 chain merges with the PoS beacon chain, the miner's income will drop to 0(Because the Ethereum 1.0 chain will abandon the PoW mechanism by then),andUsed to reward Ethereum stakers(stakers)The amount of newly issued ETH will be reduced by ~90% compared with the amount of newly issued ETH in the PoW mechanism. At the same time, the pledgers of Ethereum(instead of miners)All unburned transaction fee income will be obtained.

It is worth noting that one major difference between Ethereum PoW miners and PoS stakers is that, unlike PoW miners,Stakers are not forced to sell their ETH earningsTo pay very high electricity bills, maintenance costs, personnel costs, rent, hardware costs, etc. Stakers only need to sell some ETH to paytax(if payment is required)and less electricity cost. All of this will bring ETH a ~90% reduction in additional issuanceA more pronounced supply shock.

Of course, scarcity without demand is meaningless, but the beauty of ETH is that many different use cases have created crazy demand for ETH, including using ETH toPay the gas fee(where most of the fees are burned), using ETH asDeFiCollateral in the app, traded using ETH as the "currency"NFTs, using ETH as astore of value, and using ETH as a collateral asset toParticipate in Ethereum pledge(staking) etc.。

As of this writing, there have beenMore than 7.72 million ETH are pledgedInto the Ethereum deposit contract (deposit contract), these pledged ETH will be locked for at least 1 year(This means that these pledged ETH will not be in circulation for a long time), and this number continues to grow.

obviously,Demand for ETH will only continue to grow and strengthen over time as Ethereum expands its use cases,At the same time, ETH will continue to strengthen its position as the "Internet native currency". For the scarcity of ETH and its demand engine, please refer to the previous article "ETH's Scarcity Engine》。

Some might argue against this and ask whether this level of scarcity is actually desirable for a cryptocurrency, but I think there is a common misconception here. Although ETH is the "currency" in the Ethereum network,It is not an ideal "currency": The best use of ETH isCreate an ideal "currency" as a strong and valuable collateral asset. for example,RAIIt is a "stable currency" whose value is not anchored to the US dollar, andRAI is issued using only ETH as collateral, because it wants to leverage the decentralization and collateral properties of ETH while creating a stable asset. Of course, there are many other projects that are also trying to create a decentralized stablecoin, and I think that among these projectsMost will use ETH in some way。

I've said it many times before,EIP-1559 is just an appetizer, the real supply shock of ETH is the merger of the old and new chains of Ethereum!I'm personally looking forward to seeing how much new ETH will be issued for staking, and how much of the newly issued ETH will eventually be sold by stakers. I think both willvery low, which in turn brings aboutThe Liquidity Crisis on the ETH Supply SideIn short,

In short,EIP-1559, ETH Staking(staking)And the merger of the old and new chains will bring an unprecedented supply shock to ETH.