Ethereum May Achieve 1% Deflation Every Year Despite Slow Upgrade Progress
At present, the average daily output of Ethereum is about 13,000, and a total of 119 million have been produced. Its annual inflation rate is about 4.1%. However, with the help of Ethereum’s burning mechanism, its inflation rate is reduced to about 1.4%, lower than that of Bitcoin (1.7%). When Ethereum is fully upgraded, the inflation rate may be further reduced to a negative number, achieving deflation.
According to Ethereum’s economic model, the annual issuance of Ethereum goes up with the increase in the number of pledges. When the quantity of pledge exceeds 100 million, the annual issuance rate will stabilize at 1.71%, that is, the average daily output is about 5600. If by then the upgraded Ethereum can maintain the current burn volume, it can achieve 1% deflation every year.
By December 19, the Ethereum beacon chain address has pledged 8.71 million Ethereum, worth about 34.4 billion U.S. dollars, accounting for only 7.3% of the total issuance, and the actual staking rate is about 5.4%. It can be seen from the figure that the growth rate of the staking amount of Ethereum has slowed down significantly this year. In 2020, it only took 2 months to accumulate 2.18 million Ethereum. But the number has only increased by another 653 since the beginning of 2021. This is related to the slowness of the Ethereum upgrade.
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