From the data, will ETH become a super sound currency after the merger?

Original author: korpi

The Ethereum merger finally took place.

Is ETH a super sound currency now? What is expected inflation/deflation?

A short thread and some simple charts to understand the release, destruction and super soundness of ETH.

What does Ultra Sound mean?

BTC is considered a stable currency due to the upper limit of Bitcoin supply. If the supply of ETH is decreasing, we can call it Ultra Sound.

How can the supply of ETH decrease?

  • ETH is created by issuing to block producers.

  • ETH is destroyed through the cost destruction mechanism.

If more ETHs are destroyed than created, the supply will be reduced.

Issuance and destruction

  • After the merger, the issuance of ETH depends on the number of ETH pledged.

  • ETH destruction depends on the activities in Ethereum.

In the figure below, the blue line shows the gas price (basic cost, BF), which offsets the ETH issuance of different quantities of pledged ETHs.

  • Higher BF=> deflation

  • Lower BF=> inflation

Where are we now?

Currently, $13.6 million of ETH has been pledged. The base fee should average at least 14.6 GWEI to offset the issue of Proof of Interest (PoS).

"Average" is a key term here. It doesn't have to be higher than this number all the time

Average basic cost

Basic costs are volatile. Sometimes it has only one digit. But sometimes a much publicized NFT mint sends it to the stratosphere.

The average basic cost calculated by month tells us more:

  • ETH will experience inflation in August and September 2022.

  • ETH will experience high deflation in other months.

Average basic expenses by quarter

In the days of deflation, FOMO (Fear of Missing out) reached its peak, so that the period of inflation was offset.

By summarizing data at the quarterly level, ETH will experience deflation in all quarters. That is why we should focus only on the long term.

Inflation/deflation... but how much?

Without figures, inflation/deflation is a meaningless term.

The following table shows the annual growth of ETH supply of different levels of pledge ETH and average basic expenses.

Green cell token super sound scenario.

Inflationary ETH is still better than competitors. even though:

  • Pledged ETH more than doubled to 30 million

  • And the activities on Ethereum almost stopped, reaching 5 GWEI average basic cost

ETH's annual inflation rate is only 0.57%. This is still much lower than SOL, AVAX, ADA or BTC.

Current supply growth forecast

The current annual inflation rate is expected to be 0.1%. This is based on the low activity of Ethereum in the past 30 days.

If we include the whole history of ETH destruction, the predicted supply growth will be negative, - 1.5%.

Is it super sound?

In the downturn of Ethereum's activities, ETH may not be?? (Super sound).

But it is not far away. But is it really important& nbsp; Even in the worst case of inflation, ETH's inflation rate is lower than other tokens.

When the activity resumes,?? (Super sound) will be written.