#ETH #Ethereum #ethereumshanghaiupgrade #eth2.0
Ethereum's total supply has decreased by 66,000 ETH in the first few months of 2023, according to recent reports. This trend suggests that the network and its cryptocurrency are now functioning under a deflationary model. IntoTheBlock, a market analysis platform, shared this information on Twitter, indicating that this decrease in supply corresponds with the burning of fees associated with each mined block on the network after the introduction of the EIP-1559.
The burning of assets has increased significantly since The Merge's arrival in September 2022, which exchanged Proof-of-Work mining for Proof-of-Stake, significantly reducing transaction costs and enabling new validators without the need for specialized hardware. The increase in burned assets is due to the high volume of transactions that the network can now process more easily. This dynamic balance is causing the network to destroy more ETH than it produces, giving the cryptocurrency deflationary properties that could limit the supply further while meeting growing demand and ensuring the price remains stable or even increases.
The upcoming Shanghai update, which will take place on April 12th, introduces a new property that will allow network validators to withdraw ETH as collateral to process blocks and access rewards. This incentive is an exciting development for individuals interested in joining the network as validators.
In summary, Ethereum's deflationary properties could have a significant impact on its price in the future. The decrease in supply, coupled with the increase in burning assets, is a clear indication that the network is moving towards a more efficient model. The upcoming Shanghai update will add to this efficiency, making the network more attractive to new validators and potentially fueling further growth in the network