Simulation shows that Ethereum’s inflation rate is significantly lower when using Proof-of-Stake
It has been 105 days since Ethereum switched from a proof of work (PoW), to a proof of stake (PoS) blockchain. In 2023, the number Ethereum validators will surpass 500,000. Based on metrics, Ethereum’s issuance of new coins has fallen significantly and only 4,790.45 Ethereum has been minted in the time since The Merge occurred on Sept. 15, 2022.
Ethereum’s Issuance rate is 0.014% per annum, in contrast to the Simulated PoW inflation rate of 3.58% per year
Since its proof-ofstake (PoS), Ethereum (ETH) network has been running for more than three month. Since then, 4,790.45 ethereum (or $5.7 million) has been added to the supply. According to statistics from ultrasound.money, Ethereum’s current issuance rate for new coins per year is 0.014%.
This is a lot different from what it would have been if Ethereum were still a PoW-chain, according to ultrasound.money simulation metrics. If ETH remained a PoW-chain for the last 105 day, then the issuance rate or inflation rate per year would be 3.58%. This would add approximately 1,247.674.60 ether to the supply at 10:15 AM (ET) Dec. 29, 2022. A PoW ETH chain could have added more value than $5.7 million instead of $5.7million.
Ethereum has a lower issuance rate. Records show that approximately 658,000 ether are burned each year. Since the Aug. 5, 2021 London Hard Fork, 2,795,773 ether (or $8.78 billion) has been destroyed by ETH. Dune Analytics data shows that traditional ethereum transfers (ETH) are the largest ETH burners. They account for 247.008 ETH lost since the London Hard Fork.
Opensea, a non-fungible token (NFT), marketplace, and its users have burned 229,928.53 ether. Uniswap V2, a decentralized exchange (dex), has burned 143.394.07 ether since August 5, 2021. Transferring stablecoin USDT has resulted in 123,014.14ether being burned to date. Swaprouter 02 is the fifth largest burner, with 110,868.70ether.
According to beaconcha.in statistics, the number validators validating consensus within Ethereum is close to 500,000. On December 28, 2022, 492,863 validators had been recorded. This is a significant increase over the number of validators that were registered 12 months ago (around 275,054). Data from mevwatch.info shows that 69% of blocks mined on ETH are subject to U.S. Office of Foreign Assets Control compliance.
What do you think about Ethereum’s network issuance rate since it went from proof-of work (PoW), to proof-of–stake (PoS). Please comment below to let us know your thoughts on this topic.