Ethereum 2.0 Set to Cause “Halving”, the Aftermath of Ethereum’s Proof of Stake

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ETH 2.0 is an upgrade that will move ETH away from a mining consensus mechanism to staking, which encourages committed holders to stake their coins in exchange for rewards.

Proof of Stake (PoS)- a consensus algorithm by which a cryptocurrency blockchain network aims to achieve distributed consensus. In PoS, the creator of the next block is chosen through the stake which is a combination of random selection and wealth or age.

ETH Supply to Be Halved- presently, Ethereum has about 4.7 million ETH in issuance yearly, with ETH 2.0, ETH supply will range between 100,000 and 2 million annually, apparently less than 2 million. This fact was emphasized by Ethereum Co-founder, Vitalik Buterin who stated that the reason behind the preference of Proof of stake consensus was to reduce ETH issuance to somewhere around 2 million, which is a “halving ” of the around 4.7 million yearly supply. He stated that a calculation has been inputted in the specs of ETH 2.0 that will bring the theoretical maximum issuance to about 2 million yearly even in the face of maximum participation.

Explaining what was meant by “burning”, Buterin said that the initial transaction fees charged by the protocol will be halved, the first part goes to the miner as a ‘reward’, while the other part just gets burnt.

Adam Cochran of MetaCartel Ventures DAO sees ETH 2.0 as one of the biggest “Economic Shifts”. He sees a switch to staking and a supply shock increasing demand, necessitating a bull run.

Although, the number of addresses holding 32 ETH which is the exact amount required for validators to stake in ETH 2.0 increased by over 14% since 2019 indicating a demand surge. On-chain analytics, Glassnode, puts this figure at over 116,351 Ethereum addresses.

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