One Year In: How Has Ethereum Changed?
According to Sassal, a prominent figure in the Ethereum community, 980,000 ETH have been burned since Ethereum transitioned from a proof-of-work (PoW) consensus to proof-of-stake (PoS) [source]. This burning process, which started with the implementation of the London hard fork, involves the immediate destruction of transaction base fees, making Ether deflationary [source]. As a result, Ethereum‘s supply has decreased by 0.25% since the Merge [source].
The transition to PoS also sparked a shift in the network’s security mechanism. Validators now secure the network by staking their ETH, replacing the role of miners under the PoW consensus. To date, over 11.6 million ETH has been staked to earn passive income and ensure network security [source]. Notably, Lido DAO holds a significant market share of 22.64% in terms of staking, followed by exchanges like Coinbase, Binance, and Kraken [source].
Since the Merge, the Ethereum network has witnessed a significant increase in the number of validators, with 362,000 new validators joining the network [source].
Down In Valuation But Not Value
While Ethereum’s price has only increased by close to 11% over the past year, it is important to note that it reached an all-time high of $4,891 in the previous year. However, there are positive takeaways from the Merge. Despite the current bear market, Ethereum’s value has undeniably grown since the transition [source].
Moreover, the Merge has led to a decrease in ETH’s annual inflation rate and a notable increase in trading activity on Ethereum’s layer-2 chains. These indicators suggest that more individuals are being onboarded into the Ethereum ecosystem [source].
Additionally, Ethereum’s fundamentals are at an all-time high, with traditional financial institutions showing interest in ETH. ARK Invest, led by Cathie Wood, has recently filed to offer an Ethereum Spot ETF, marking a significant milestone in the adoption of Ethereum by traditional finance [source]. Other institutions, including ARK Invest, have filed to offer Ethereum futures ETFs [source].
Overall, despite the fluctuations in valuation, Ethereum continues to demonstrate its value and potential for growth.
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