With the Ethereum merger looming, the upgrade is widely expected to make Ethereum a deflationary cryptocurrency.
The hyper bullish thesis is that ETH 2.0 will immediately herald a new era of deflationary supply for Ethereum, strategists from Singapore-based crypto trading firm QCP Capital said in a recent report.
But that’s not entirely true, at least for now. While the merger could lead to a reduction in the supply of Ethereum, making it a deflationary asset, low network usage could delay the expected bullish effect. While the bullish impetus will come from the burn rate, in crypto winter, it doesn’t look so rosy.
According to QCP, miners currently receive 5 million ETH (~$8.1 billion) per year. After the transition, this number is estimated to drop to 1 million ETH per year for rewards paid to PoS stakers. (The amount of the reward paid depends on the number of stakers, which in turn is tied to the staking yield).