|
|
The merger will bring two changes.
It will eliminate PoW ETH rewards for each block (ETH paid to miners in exchange for their computational power to maintain the network). Currently, these rewards total about 13,000 ETH per day. After the merger, the rewards for miners will decrease from 13,000 ETH per day to 1,000 to 2,000 ETH per day, and these miners will be replaced by network validators (individuals using ETH, who earn more ETH by helping determine which ETH transactions are valid and which are invalid). These rewards will occur at the same rate regardless of the price of ETH and the usage of the Ethereum network.
Each block will burn a certain amount of gas fees (meaning the ETH used to pay these fees will permanently exit circulation). This variable depends on the network's usage. Network usage is a self-reflective variable, and I will provide a more detailed explanation later.
Total ETH inflation = Block reward - Gas burn fees
I treat the block reward as a constant under the current local conditions. Gas fees depend on the network's usage.
Inflation = Block reward > Gas fees
Deflation = Block reward < Gas fees
Those who believe ETH will become a deflationary currency must also believe that network usage (and, therefore, the ETH consumed as fees paid by users) will be high enough to offset each block reward in ETH as a reward for validators. However, to evaluate whether they might be correct, we must first ask—what determines the usage of a cryptographic network like Ethereum?
When choosing L1 smart contract networks, users have many options. Other L1 chains include Solana, Cardano, Near, and more. Here are factors I believe influence users' choices of L1 chains:
Market participants' views on market conditions.
Applications: Which network has the most robust DApps? Which of these applications are leading? Which of these applications has the most significant transaction liquidity? |
|
Post time 23-1-2024 20:43:59