Ethereum merged from Proof-of-Work to Proof-of-Stake around 4 days ago and we start already seen the impact within the ecosystem. While we are in a bear market or crypto winter, I will not comment on the falling price of Ethereum, but rather take a look at other metrics and try to figure out what this might signify for long-term investors like me.
Since the Ethereum Merge on 2022 Sep 15, 6:42:42 UTC we can see the difference in the Supply from the PoW to Pos. If we were to stay on PoW the Supply would change to +52,657.94 Eth or +3.81% per year, while merging to PoS resulted in the Supply staying at +2,984.39 Eth or +0.22% per year, which has a big impact on steering Ethereum towards a more deflationary model. Less supply, bigger price... at least in theory.
If to current Supply decrease we would add also the Burning mechanics from the fees, we see that the effect is much more pregnant than thought. From a Supply Growth of +2.12% per year on the PoW protocol, we move to -1.42% on the PoS protocol and truly the model becomes deflationary. Scarcity will play a big role in the extraction of value from the Ethereum cryptocurrency and I think that now more than ever the supply mechanics really achieved that.
The race for Ethereum to become the most desirable money is on the right path and the current tokenomics once moved to Proof of Stake are stronger than ever. The scarcity of the token is ensured through staking, DeFi and burn mechanics and probably new innovation in the space considering the immense community and developers around the world.
The Ethereum value grows day after day and we see it positioned between Intel and Amazon as a market cap which is quite impressive and probably it will move faster above these due to the rapid technological innovation and expansion. Expected events like Bitcoin flippening stands at 44.49%, which is quite encouraging. The ultimate goal is to become ultra-sound money by flippening Gold (1.44%) and USD (0.76%), but that will take an entire revolution to happen, if ever. Nevertheless, the face of Ethereum changed for the better with The Merge, and becoming a Proof-of-Stake blockchain has opened new technologies to embed within as well.
Note: Stats presented within this post are a snapshot from https://ultrasound.money/. An Ethereum tracking tool that should be part of any crypto enthusiast!