ETH Turns Deflationary as Gas Fees Increase Amid Recent Price Rally #ETH #Turns #Deflationary #Gas #Fees #Increase #Price #Rally

 

Ether has turned deflationary as the gas fees hit 15 gwei amid the most recent price rally. This happens months ahead of the much-anticipated Shanghai upgrade, which promises to enable ETH stakers to withdraw from the Beacon Depositor Contract.

  • Data from ultrasound.money reveals that ETH has turned deflationary once again. This happens for the first time since December 1st.
Source: Ultrasound Money
  • There’s currently around 30 less ETH than there was in circulation back when the Merge took place last year, effectively making Ether a deflationary cryptocurrency, at least for the time being.
  • The reason this is possible is because of the network’s transition to Proof-of-Stake, as well as the implementation of the EIP 1559.
  • EIP 1559 was introduced back in 2022, and it activated a burn mechanism, which destroys ETH gathered from fees that are associated with verifying transactions on the network. The higher the fees, the higher the burn rate.
  • Now that Ethereum no longer runs on the Proof-of-Work consensus algorithm, the issuance of fresh ETH has diminished tremendously and coupled with the ETH burned as a result of EIP-1559, the cryptocurrency has temporarily turned deflationary.
  • It’s also worth noting that this takes place a couple of months before the release of the Shanghai upgrade. It is expected to hit the public testnet in February and the mainnet in March.
  • The upgrade is promised to enable ETH stakers to withdraw from the Beacon Depositor Contract.
This article originally appeared on cryptopotato.com.

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The post ETH Turns Deflationary as Gas Fees Increase Amid Recent Price Rally appeared first on CryptosRus.

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