The Ethereum price [$2,706] continues to print new all-time highs despite Bitcoin being down 16% from its ATH made 15 days ago.
Ethereum’s new ATH price is $2,757.36. Ether one year ago on this date was $197.15. It’s gone parabolic despite the network’s throughput throttling the high demand and therefore accelerating high fees for around the last 6 months.
Ethereum price and the gas fees
ETH EIP 1599 changes the way gas fees are used and will burn the gas fees that allow users to play on the network instead of miners reaping the gas fee rewards for securing the network and processing the network’s transactions. This mechanism is basically going to cut supply by adding a deflationary aspect to the Ethereum protocol that’s currently not capped. At the time of writing, the ETHER circulating supply is 115,658,899.
The EIPs/eip-1559 GitHub Simple Summary: A transaction pricing mechanism that includes fixed-per-block network fee that is burned and dynamically expands/contracts block sizes to deal with transient congestion.
IEP 1599 is slated to be released in August. The new fee structure will actually send the fees back to the ETH network in what is called a basefee. Miners don’t completely go away yet but their services are set to be reduced with EIP 1599 and the fees to miners will soon become optional.
Ethereum mining is a multi-billion dollar business and of course miners are putting up a fight but it will likely be to no avail. Most of the core Ethereum developers are onboard with the proposal and users are ready for a more efficient network experience.
Following EIP 1599 is ‘the merge’ which is when Ethereum moves from proof-of-work [PoW] to proof-of-stake [PoS]. The timeline for that isn’t set in stone and ETH enthusiasts often don’t get the dates they’re anticipating but right now the plan is to launch this transition in late 2021 or early 2022. This event will eradicate ETH PoW mining and replace the miners with PoS.
Sharding is the Culmination of ETH 2.0
While Ethereum is still the industry’s smart contract leader, other blockchains such as DOT, ZIL, and BSC are knocking on the door and are pushing ETH devs to deliver quickly. By increasing the TX throughput with PoS consensus and reducing issuance, Ethereum is looking to cement its spot as the top smart contract platform for a long time.
It’s anticipated that the move to PoS will reduce the annual rate of ETHER issued by more than ½. Since crypto miners use a lot of energy, utilize expensive hardware and have overhead in building fees that they must account for, the idea is that by moving to PoS they’re actually relieving a lot of the sell pressure on the network’s native token, ETHER. Miners are forced to sell ETHER back on the market that they receive for processing fees and securing the network to cover their costs.
By moving to PoS and eliminating the expensive mining overhead, it’s thought that the ‘ETH is money’ narrative will have more validity. This is the belief by many ETH enthusiasts since the more users that are utilizing the network provides a direct deflationary aspect to the ETHER token. The increased TX throughput creates a chain reaction; moreover, it results in an increase in burnt TX fees and a reduction of the tokens in circulation will follow.