Ethereum is deflationary? | Bitcointalksearch.org

eaLiTy

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Quote from: ObscurePen on February 02, 2022, 03:05:07 PM

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Oh is that so? But I have heard the term deflationary applied to Bitcoin because of its coin cap of 21 million. I was thinking since a similar thing is happening with Ethereum where there are fewer coins entering the market than before, it might also be deflationary.

You cannot really compare the deflationary value of BTCitcoin who is 21 million coins total and close to 19 million coins in circulation while ETH does have over 120 million coins in circulation as we speak and we are talking about deflationary coin is a joke because we are changing the parameters on the go and both are not the same

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Quote from: magneto on February 06, 2022, 04:31:50 PM

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I think that ETH will be less inflationary compared to BTC in the long run, though. This is just a function of its emission curve which is a lot flatter than even BTC due to the burned tx fees. It will be an interesting dynamic for sure, perhaps ETH prices will benefit as a result.

You create billion of coins in circulation and you burn out a few and call it an interesting dynamic, first lets see whether they can settle the scaling issue they are facing for over an year then we can talk about the financial aspects, because without a functioning technology there is no valuation. Cheesy

magneto

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If the amount of coins burned exceeds staking rewards, then sure.

But I don't think that this is currently the case per se.

I think that ETH will be less inflationary compared to BTC in the long run, though. This is just a function of its emission curve which is a lot flatter than even BTC due to the burned tx fees. It will be an interesting dynamic for sure, perhaps ETH prices will benefit as a result.

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Quote from: tvplus006 on February 06, 2022, 06:20:48 AM

The amount of burned Ethereum can be easily tracked by the link: https://ethburned.info/ Thus, since the activation of the London hard fork, which was launched on August 5, 2021, and to date, 1773033 ETH has been burned. But I did not find information on how much ETH was minted during this period. If you know both figures, then you can easily tell whether Ethereum is deflationary or not.

I have done additional research on this issue and can now say for sure that Ethereum is not deflationary. So as of August 5, 2021, when the London hard fork was activated, the Circulating Supply amounted to 116,980,175 ETH (Archive - https://web.archive.org/web/20210805135537/https://coinmarketcap.com/ ) Circulating Supply for today is 119,470,469 ETH, that is 2,490,294 ETH more than at the time of the launch of the hard fork London. Since the issue of ETH has increased, it means that Ethereum is currently inflationary.

zasad@

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Quote from: ObscurePen on February 02, 2022, 08:00:17 AM

Is Ethereum now a deflationary currency after its hard fork which changed it to PoS?

See my old post
https://bitcointalksearch.org/topic/m.54686098
The PoS algorithm will reduce the emission of Ethereum by several million coins. 1,773,720.62 ETH was burned in 7 months. If miners stop receiving rewards, then the number of coins will decrease
https://ethburned.info/

tvplus006

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The amount of burned Ethereum can be easily tracked by the link: https://ethburned.info/ Thus, since the activation of the London hard fork, which was launched on August 5, 2021, and to date, 1773033 ETH has been burned. But I did not find information on how much ETH was minted during this period. If you know both figures, then you can easily tell whether Ethereum is deflationary or not.

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Quote from: ObscurePen on February 02, 2022, 08:00:17 AM

Is Ethereum now a deflationary

Deflationary can happen once the burn will be more than the tokens minted. Ethereum was not a deflationary token. I don't see any point to call this as a deflationary coin. As far as i know ethereum has burn mechanism but remember that it's not always the burn is burning more ethereum compared with the new ethereum minted from the network. it's too early to call ethereum as a deflationary coin.

Quote from: ObscurePen on February 02, 2022, 08:00:17 AM

currency after its hard fork which changed it to PoS?

Im not sure if ethereum will be fully going to the POS. Ethereum has not done yet with its roadmap and it needs at least 1 or 2 years to see that will happen. Im feeling skeptical if roadmap will be fully implemented withouot any change at the middle of progress. So many hardfork already passed and it will not come son. POS may get another delay again.

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Being deflationary depends on the supply factor. I think when a coin is created in a way that it would be reducing in supply, say for example that there is 100,000 supply of the coin and the devs have made it in such a way that it would be reducing 2% or so every year, then that would mean it is deflationary, because as the supply continues to reduce every year by 2% the demand becomes more due to the scarcity and the value of one coin would increase.

That’s why you would see some coins these days that are being burnt every year as a way to reduce the number of coins. You would see some of them start with 1 million and before you know it 500k has been burnt and the number of coins reduce to half.

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Quote from: letyouearn on February 02, 2022, 08:15:46 PM

No, it's not. And it won't be I think. It's inflation will be quite low though, and this will help ETH price to grow in the long run - that's for sure. Bitcoin is a bit deflationary - because of the lost coins.

Nah, that’s not true, Ethereum is also deflationary. If you have been following up you would know that ETH has been burning a lot of coins. The last time that I checked they have burned about 1.5 million Ether according to my source, which was more than the number of ETH was created that week. This started since the EIP-1559 introduced a new burning mechanism in the ETH platform. But normally like you have said, the inflation would be low even if it wasn’t deflationary, because they set a more predictable transaction fees in an effort to lower the rate of congestion on the network.

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Quote from: ObscurePen on February 02, 2022, 08:00:17 AM

Is Ethereum now a deflationary currency after its hard fork which changed it to PoS?

It's not yet become a deflationary token. As you can see that through this tweet account https://twitter.com/ethburnbot the total ethereum issued by the miners being surpluss compared with how much being burned by the network or ethereum burn mechanism. that means if it's not yet become deflationary token and remember that ethereum is not become POS token. As far as i know that there was no ethereum 2.0
Ethereum update will be only focusing with the scalability solution. I thought that you have heard about this before. It's from the news that already published by some popular crypto news sites.

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Quote from: avikz on February 02, 2022, 02:23:53 PM

Nope! A change in algorithm cannot make a coin inflationary or deflationary. In crypto coin, inflation is calculated based on its fiat value.

It's not quite correct. I think he asked if Ethereum will become deflationary in terms of the amount of available Ether and not in terms of the fiat value. Thus, the project can indeed become deflationary if the amount of newly created Ether is less than the burned Ether. In terms of fiat value, of course, it's then a different story.

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I think Ethereum is not a deflationary currency. Not now after the London hard fork was activated, not before when the EIP-1559's burning mechanism was not yet in effect.

So even if the EIP-1559's burning mechanism is taken into consideration, the supply of Ethereum is still increasing overall. Remember that the block time of Ethereum is only around 15 seconds. And every block, there is an additional of 5 ETH to the supply. The number of burned coins is lesser than the number of new coins injected to the supply.

Lastly Ethereum's hard fork didn't and is not the mechanism to change it to PoS.

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Ethereum's change to POS will not create deflation if ethereum continues to grow and always shows its quality. POW seems too wasteful of energy to make ethereum want to change the method of mining, I don't know for sure there will be deflation or not, but as long as it hasn't happened everything is fine.

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Proof of stake algorithm is different from deflationary utility, you can only earn more ETH by staking some ETH and I don't see any deflation working in between staking, deflation use case is when max supply of a token decreases when transactions are been made with the token.

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Quote from: ObscurePen on February 02, 2022, 08:00:17 AM

Is Ethereum now a deflationary currency after its hard fork which changed it to PoS?

This is still very vague to think about because since Ethereum has had a Hardfork I don't have time to think so for now other than hoping for something new that can be really good for itself, so I can't really answer this right now.

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I don't understand why ethereum will soon turn the mining method into POS, because so far POW is very good and proven to be able to survive with the mining community which is also a whale. I saw $Dash one of the coins mined with a very quiet POS. It's possible that Ethereum will have the same fate.

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The difference between the proof of work and POS is how to produce more coins. Instead of requiring mining energy, it will be less energy consuming and faster. Therefore, instead of people buying expensive equipment, there will be competition for currencies and a decentralization of distribution.

The contraction in supply and demand may affect the price, but in the short term, the success of ether in converting to POS currency, which is low in fees and good for daily transactions, means an increase in demand and thus the price.

For more you can watch ---> Bitcoin Q&A: Proof-of-Work (PoW), Proof-of-Stake aantonop YouTube OR read ---> Proof of stake (PoS) (Ethereum) - aantonop

masterrex

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IMO, I think that was only put in the wrong context, But based on the detailed explanation above from some of the knowledgeable forum users I agree that the PoS itself is nothing to do with the inflation and deflation mechanism of the Ethereum token supply because it only happens for the purpose and functions of the EIP-1559 implementation by burning the Ether which is collected from the hefty transaction fees of the Network and I think there's some thread about the "unsure" number of Ethereum token total supply so I guess it doesn't make sense to proclaim that Ethereum is now a deflationary coin when we are not sure about its total token supply. correct me if im wrong?

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Quote from: malcovi2 on February 02, 2022, 07:05:54 PM

Quote from: ObscurePen on February 02, 2022, 08:00:17 AM

Is Ethereum now a deflationary currency after its hard fork which changed it to PoS?

yes, its a deflationary currency i think around 1m ether was already burned due when london fork was applied.
To those who dont know, ether EIP-1559 has a burn mechanism

https://www.theblockcrypto.com/post/113650/heres-how-much-eth-has-already-been-burned-due-to-eip-1559

Ethereum is one of the chains that has been quite active in making many changes to its network, including an update to ethereum 2.0 in which there is an ongoing burning mechanism, and this has the potential to make ethereum a better inflation protector than bitcoin, with increased EIP -1559currently ethereum is reportedly burning at almost 10 ETH /minute.

https://watchtheburn.com/

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Quote from: tyz on February 02, 2022, 08:48:36 AM

A switch to PoS alone does not make a coin deflationary unless the quantity remains fixed. Ethereum can become deflationary if the number of fees burned is higher than the new coins created. In the past, this has been the case on some days, but not yet in the long run. For example, in December 2021, Ethereum inflation was around 1.8%.

And just to add to that, we even don't know what is already real numbers are far is circulation is concern.

So no, i don't think that Ethereum will be deflationary, unless they really made some changes which I doubt that devs are prioritizing right now.

letyouearn

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No, it's not. And it won't be I think. It's inflation will be quite low though, and this will help ETH price to grow in the long run - that's for sure. Bitcoin is a bit deflationary - because of the lost coins.

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