Ethereum Merge update has already been noted as a fundamental point of view for the second largest cryptocurrency on the market. The main reason why this is so important is to completely change the main consensus mechanism of the network, which no longer uses mining as the main tool to promote the network in addition to pushing ETH deflation to new levels.
According to the declaration forecast for Ethereum, the deflation rate of Buterin’s creation is expected to nearly triple as the asset’s net issuance could reach -4.5%. According to online tracking services such as WatchTheBurn, current issuance remains at around 2.5%, which is 50% less than before the EIP-1559 update.
$ETH will become deflationary after the merger
Net ETH issuance is likely to range from -0.5% to -4.5% depending on network fees.
Here is a forecast of what it will look like based on 2022 historical data. pic.twitter.com/KdWq072Mbz
— Lucas (@LucasOutumuro) July 22, 2022
Negative emission may not be as critical immediately after the upgrade, as the network needs more time to redistribute, so the deflation rate is likely to remain around 1%.
Is deflation as good as everyone expects?
Most Ethereum investors and users can’t wait for network deflation to pick up as it is expected to positively impact the value of ETH in the market due to the rapidly shrinking supply.
The short-term effects of deflation may be beneficial for some investors, but future users may not be as happy with the rise in ETH prices in the market, which could be followed by a spike in transaction fees.
Most industry experts believe that the merger will not solve network scalability problems. With the rapid rise in Ethereum prices, the availability of the network is questionable, as is its scalability.
Credit : u.today