• bitcoin
    Bitcoin(BTC)
    $0.00 4.63%24H
  • ethereum
    Ethereum(ETH)
    $0.00 7.65%24H
  • binance-coin
    Binance Coin(BNB)
    $0.00 8.29%24H
  • usd-coin
    USD Coin(USDC)
    $0.00 -0.04%24H
  • cardano
    Cardano(ADA)
    $0.00 5.58%24H
  • chainlink
    Chainlink(LINK)
    $0.00 7.66%24H
  • bitcoin-cash
    Bitcoin Cash(BCH)
    $0.00 5.04%24H
  • stellar
    Stellar(XLM)
    $0.00 4.19%24H
  • vechain
    VeChain(VET)
    $0.00 7.84%24H
  • tezos
    Tezos(XTZ)
    $0.00 5.65%24H
  • eosdac
    eosDAC(EOSDAC)
    $0.00 3.34%24H
Crypto Currency Bazaar 4u: Today’s Latest Worldwide News on Cryptocurrency Market delivered to the last minute, Live Crypto Price Data and Indexes, Crypto Investment & Finance opportunities & Blockchain projects, Global Crypto Classifieds
  • INVESTMENTS
    • Crypto General
    • Masternodes
    • Mining Projects
    • NFTS Investments
    • Invest In ICO
    • Exchanges
    • Staking Yeild Farming
  • WORLD
  • USA
  • CANADA
  • JAPAN
  • UK
  • UAE
  • INDIA
  • MORE
    • BRAZIL
    • AUSTRALIA
    • EL SALVADOR
    • CENTRAL AMERCIA
    • SOUTH AMERICA
    • AFRICA
    • EUROPE
    • ASIA
    • OCEANIA
    • ICO
  • Login
  • BLOCKCHAIN
  • BITCOIN
  • ETHEREUM
  • NFTS
  • ALTCOIN
  • MINING
  • VIDEOS
  • LIVERATES
  • SHOP
  • CLASSIFIEDS
  • ADVERTISE
  • SUBMIT PRESS RELEASE
HealthNews
No Result
View All Result
Home ASIA

Ethereum Supply Shock: 3 Reasons Why It Might Be Coming

CB4U by CB4U
January 6, 2022
in ASIA
0
Ethereum Supply Shock: 3 Reasons Why It Might Be Coming
0
SHARES
1
VIEWS
Share on FacebookShare on Twitter

ETH withdrawals are rising dramatically. Here are 3 reasons why there could be an Ethereum supply shock coming!

Ethereum has had an incredible 2021 so far, with record adoption of decentralized finance (DeFi) protocols, and non-fungible token (NFT) projects, with the latter beginning to find new use cases in the burgeoning metaverse and GameFi spaces, such as Play-to-Earn (P2E) games such as Axie Infinity, leading to the original smart contract network’s ETH cryptocurrency almost touching $5,000 recently.

This came despite Ethereum‘s well-known problems of exorbitant gas fees and painfully slow transaction speeds driving many developers and users on to so-called “Ethereum killer” alternative layer-1 networks like Binance Smart Chain, Polkadot, Solana, Cardano, Avalanche, and more. Despite these problems, it would appear that ETH continues to be on the shopping list of crypto investors, especially as Ethereum continues to move closer to ETH 2.0 and take necessary actions such as pushing through deflationary mechanism EIP-1559 and staving off the introduction of the “difficulty bomb”, which will all but eradicate ETH mining profitability in order to encourage migration to its Proof-of-Stake (PoS) network, to June 2022.

You’ve likely come across reports about massive ETH outflows off exchanges, which saw a withdrawal of more than 427,000 ETH in November alone. CryptoQuant noted back in October that such outflows were likely an institutional activity, or “smart money”.

With so much ETH being moved off exchanges, are we about to see a “supply shock”, where the amount of ETH held in exchange reserves is depleting faster than it can be replenished? Before we get to that, let’s look at 3 reasons why this might be happening.

The ETH burn mechanism

The Ethereum network earlier this year pushed through an update called EIP-1559 as part of the London Hard Fork, introducing a burn mechanism to the network. The goal of the update was to address the blockchain’s exorbitant transaction costs and congestion while reducing ETH’s inflation. This deflationary mechanism was expected to help make ETH prices sustainable, perhaps even deflationary in some cases.

About 946,000 ETH has been burned from supply since the deployment of EIP-1559, and this number continues to grow. Note that these coins are gone for good. And looking at the volume of transactions, we can expect the burn rate of ETH to increase further in the near future.

Staking on ETH 2.0

Staking on ETH went live in December 2020 following the launch of the Beacon Chain. Since then, legions of hardcore supporters and investors have staked their ETH so they can start earning staking rewards despite the fact that the upgrade is not fully functional yet. 

And here’s where it gets interesting: ETH 2.0 staking today is a one-way street. Once you transfer your ETH 1.x to 2.0, you can’t reverse it, meaning it will remain untouched at least until the merge that is expected to come in the summer of 2022. With 8 million coins staked in the ETH2 deposit contract, we now have over $35 billion worth of ETH locked for several months to a year, all while we’re continuously burning its supply.

DeFi and NFT activity and interest continue to rise

Data from Defi Llama shows us that the interest in DeFi on Ethereum is still growing, despite the rise of cheaper alternatives like Solana and Fantom. In fact, we now have about $169 billion worth of ETH locked in DeFi contracts, a testament to the trust and confidence investors have in Ethereum, despite its high gas requirements.

Conclusion

Despite its systemic problems, Ethereum’s continuing supply squeeze shows that the world’s biggest eco-system of crypto projects isn’t going anywhere soon. With all the interest in Ethereum 2.0, staking, DeFi, NFTs, as well as its rising burn rate, and scaling layer-2 networks like Polygon continuing to serve as positive narratives in Ethereumland, in fact, its future is still quite bright and it should continue to play a leadership role in the the aforementioned industries. But don’t take it from me. Even crypto antagonists JP Morgan recently said that Ethereum is a better bet than good old Bitcoin!

And unless there is a major crash in the next few weeks, we don’t see this changing anytime soon. In fact, ETH holders should be happy about this since the less supply there is, the faster we break that stubborn $5K price ceiling and head off to the promised land of $20,000 and, of course, the prophecy of the Flippening.

🚨 🚨 🚨 🚨 🚨 🚨 14,999 #ETH (63,164,631 USD) transferred from unknown wallet to unknown wallethttps://t.co/QpMQCPqXQR

— Whale Alert (@whale_alert) November 17, 2021

If institutions and whales are HODLling, there’s no reason why you shouldn’t as well. DYOR though and to be safe. Consider techniques like Dollar cost averaging (DCA) when buying to spread the risk and of course, keep it on a CoolWallet where you can unlock further use cases for it through decentralized exchanges, staking and now also NFT collecting through Rarible!

This article is for educational and entertainment purposes only. The opinions included in this blog post are that of the author alone, do not represent that of CoolWallet or CoolBitX and should not be construed as financial advice of any sort.

Written by Werner Vermaak

Advertisement Banner
Previous Post

VOXEL/USDT trading on WazirX – WazirX Blog

Next Post

Goldman Sachs Sees BTC Taking Further Market Share From Gold, $100k Possible This Year

CB4U

CB4U

Next Post
Goldman Sachs Sees BTC Taking Further Market Share From Gold, $100k Possible This Year

Goldman Sachs Sees BTC Taking Further Market Share From Gold, $100k Possible This Year

Discussion about this post

RECOMMENDED

Ripple vs SEC: Hinman Documents Handed Over

Ripple vs SEC: Hinman Documents Handed Over

3 months ago
Korean police urge exchanges to freeze Luna Foundation’s assets

Korean police urge exchanges to freeze Luna Foundation’s assets

8 months ago

DON'T MISS

NFT Collection Ember Sword Land Price, Stats, and Review

NFT Collection Ember Sword Land Price, Stats, and Review

January 27, 2023
FTX Lawyers Attempt to Question Bankman-Fried’s Family and Inner Circle for Financial Insight – Bitcoin News

FTX Lawyers Attempt to Question Bankman-Fried’s Family and Inner Circle for Financial Insight – Bitcoin News

January 27, 2023
UK’s FCA Gives Regulatory Approval To Crypto Firms But Only A Few, Here’s Why

UK’s FCA Gives Regulatory Approval To Crypto Firms But Only A Few, Here’s Why

January 27, 2023
Here’s Why XRP Price Is Surging Despite Struggling Crypto Market

Are Whales Dumping XRP? Here’s What Data Suggests

January 27, 2023
Crypto Currency Bazaar 4u: Today’s Latest Worldwide News on Cryptocurrency Market delivered to the last minute, Live Crypto Price Data and Indexes, Crypto Investment & Finance opportunities & Blockchain projects, Global Crypto Classifieds

The Cryptocurrency Bazaar 4U was founded in 2020 for providing the most trusted information for the Crypto enthusiasts covering a broad range of news about blockchain technology, cryptocurrency assets, emerging fintech trends in the decentralized space, and other related wide array of information surrounding this emerging technology.Our team provides the most up-to-date and accurate news from different sources in this space comprising of unbiased news, in-depth analytics, detailed cryptocurrency price charts, and insightful opinion pieces is the basis of our editorial content.

POPULAR POSTS

NFT Collection Ember Sword Land Price, Stats, and Review

NFT Collection Ember Sword Land Price, Stats, and Review

January 27, 2023
FTX Lawyers Attempt to Question Bankman-Fried’s Family and Inner Circle for Financial Insight – Bitcoin News

FTX Lawyers Attempt to Question Bankman-Fried’s Family and Inner Circle for Financial Insight – Bitcoin News

January 27, 2023
UK’s FCA Gives Regulatory Approval To Crypto Firms But Only A Few, Here’s Why

UK’s FCA Gives Regulatory Approval To Crypto Firms But Only A Few, Here’s Why

January 27, 2023

Categories

  • AFRICA
  • ALTCOIN
  • ASIA
  • AUSTRALIA
  • BITCOIN
  • BLOCKCHAIN
  • BRAZIL
  • CANADA
  • CENTRAL AMERCIA
  • CRYPTO GENERAL
  • EL SALVADOR
  • ETHEREUM
  • EUROPE
  • EXCHANGES
  • ICO
  • INDIA
  • INVERST IN ICO
  • INVESTMENTS
  • JAPAN
  • MASTERNODES
  • MINING
  • MINING PROJECTS
  • NFTS
  • NFTS INVESTMENTS
  • OCEANIA
  • SINGAPORE
  • SOUTH AMERICA
  • STAKING & YEILD FARMING
  • UAE
  • UK
  • Uncategorized
  • USA
  • VIDEOS
  • WORLD
  • CONTACT US
  • DISCLAIMER
  • PRIVACY POLICY
  • ABOUT US
  • CLASSIFIED
  • ADVERTISE
  • SUBMIT PRESS RELEASE

© cryptocurrencybazaar4u.io

No Result
View All Result
  • BLOCKCHAIN
  • BITCOIN
  • ETHEREUM
  • NFTS
  • ALTCOIN
  • MINING
  • VIDEOS
  • LIVERATES
  • SHOP
  • CLASSIFIEDS
  • ADVERTISE
  • SUBMIT PRESS RELEASE

© cryptocurrencybazaar4u.io

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
  • bitcoin
    Bitcoin(BTC)
    $0.00 4.63%24H
  • ethereum
    Ethereum(ETH)
    $0.00 7.65%24H
  • binance-coin
    Binance Coin(BNB)
    $0.00 8.29%24H
  • usd-coin
    USD Coin(USDC)
    $0.00 -0.04%24H
  • cardano
    Cardano(ADA)
    $0.00 5.58%24H
  • chainlink
    Chainlink(LINK)
    $0.00 7.66%24H
  • bitcoin-cash
    Bitcoin Cash(BCH)
    $0.00 5.04%24H
  • stellar
    Stellar(XLM)
    $0.00 4.19%24H
  • vechain
    VeChain(VET)
    $0.00 7.84%24H
  • tezos
    Tezos(XTZ)
    $0.00 5.65%24H
  • eosdac
    eosDAC(EOSDAC)
    $0.00 3.34%24H
en English
en Englishja Japaneseko Koreantl Filipinovi Vietnamesehi Hindibn Bengalita Tamilzu Zulusw Swahilide Germanfr Frenches Spanishpt Portugueseru Russian