55 days after the long-awaited merge, Ethereum finally reached “zero net issuance,” becoming deflationary, ultrasound money.
The merge reduced the issuance of Ether by about 90% by doing away with block rewards to miners in favor of staking rewards for validators who stake ETH. Because of this, the largest smart contract platform in terms of market capitalization now uses 99% less energy.
With inflation in mind, the term “sound money” was created to describe Bitcoin, which has a limited supply of 21 million tokens. Many people see Bitcoin as a sound asset because of its limited supply and decentralized nature.
The Ethereum community took the meme one step further by coming up with the term “ultrasound money” to describe Ether’s potential to become a deflationary asset whose total supply began decreasing over time after the EIP-1559 upgrade added a fee-burning mechanism. A researcher at the Ethereum Foundation, Justin Drake, popularized the term “ultrasound money.”
According to the data, more than 3,000 ETH, worth nearly $4.5 million at the time of writing, were burned in a single day, bringing about deflation. The rate at which new ETH are being created is lower than the rate at which they are being destroyed.
The total amount of Ethereum in circulation has decreased dramatically, with the annual inflation rate reaching 0.022%. The future of Ethereum as a deflationary or, at the very least, highly low-inflationary cryptocurrency looks bright if this trend continues.
The term “ultrasound money” was regularly used by Ethereum followers both prior to and after the merge. This designation, however, had no actual meaning until recently. As a result of this update, Ether holders can now stake their cryptocurrency for a 4-5% return.
The likelihood of institutional and retail adoption of ETH rising is one of the many arguments in favor of using Ethereum as “ultrasound money.”
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See original on DailyCoin
Source: Cryptocurrency - investing.com
