Ethereum Marks One Year of PoS Transition: $1.5 Billion ETH Burned and Other Key Changes
The Ethereum ($ETH) network has transitioned from a Proof-of-Work into a Proof-of-Stake consensus algorithm one year ago, in a move that has helped the network’s circulating supply start dropping and significantly reduced its environmental impact.
Ethereum transactions started burning ETH after the London hard fork, which included the implementation of Ethereum Improvement Proposal (EIP) 1559.
The EIP changed the way transaction fees on the network work. Instead of an auction system, users now pay a base fee for their transaction to be processed by validators, and can alternatively tip them to get their transactions to be processed faster.
This has meant over 980,000 ETH tokens, worth over $1.5 billion, have already been burned, while 11.6 million ETH have been staked by over 360,000 validators.
Ethereum staking has since the Merge been seen a source of revenue for both cryptocurrency holders and exchanges. These platforms offer users a staking service allowing them to maintain liquidity through a separate token while locking their ETH on-chain to earn rewards, and collect a potion of the rewards in exchange.
Over the last 30 days, Ethereum’s supply has been increasing at a yearly rate of 0.03%, up from around minus 0.003% seen last month, as fees paid on the network have dropped slightly. If Ethereum hadn’t adopted its burning mechanism, its supply would have grown by 3.4% a year over the same period.
Notably, as CryptoGlobe reported, cryptocurrency-focused arm of the renowned investment titan Fidelity Investments, which has over $4.5 trillion in assets under management, has recently suggested the second-largest digital asset by market capitalization Ethereum is trading at a discount.
According to a new report titled “Ethereum Investment Thesis,” Fidelity Digital Assets has noted that Ethereum’s current circulating supply is around 120 million ETH and that the network’s annualized fees surpass $6.8 billion, and calculated that the price of ETH should be around $2,090, applying a discounted cash flow model.
The report comes at a time in which large Ethereum whales have bought over $400 million worth of the second-largest digital asset by market capitalization over just 24 hours as their accumulation of ETH is seemingly picking up steam.
The accumulation comes at a time in which the cryptocurrency lost around 0.9% of its value over the course of 7 days amid a wider cryptocurrency market correction that has seen the space’s market capitalization drop to near the $1 trillion mark.
Featured image via Unsplash.
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