Ethereum Transitions to PoS, Burns $8.78B in Value

• Ethereum has transitioned from proof-of-work (PoW) to proof-of-stake (PoS) and in the 105 days since, 4,790.45 ether or $5.7 million in value has been added to the supply.
• Ethereum’s current issuance rate of new coins per annum is 0.014%, a stark contrast to the simulated PoW inflation rate of 3.58% per year.
• To date, 2,795,773 ether or $8.78 billion in U.S. dollar value has been burned by destroying ETH since the Aug. 5, 2021 London Hard Fork.

Since the launch of Ethereum in late July 2015, the blockchain network has gone through numerous changes and improvements. In September of 2022, Ethereum transitioned from a proof-of-work (PoW) consensus algorithm to a proof-of-stake (PoS) network. This transition has allowed for a more secure, efficient, and decentralized blockchain network that has seen significant growth since its transition.

According to ultrasound.money metrics, Ethereum’s issuance rate of new coins has dropped considerably and only 4,790.45 ether has been minted since The Merge took place on Sept. 15, 2022. This is in stark contrast to what it would have been if Ethereum was still a PoW chain, with a simulated inflation rate of 3.58% per year. That would have been approximately 1,247,674.60 ether added to the supply by 10:15 a.m. (ET) on Dec. 29, 2022, instead of $5.7 million in value added.

In addition to the lower issuance rate, Ethereum also has a burn mechanism, in which ether is destroyed and taken out of circulation. To date, 2,795,773 ether or $8.78 billion in U.S. dollar value has been burned by destroying ETH since the Aug. 5, 2021 London Hard Fork. According to Dune Analytics, the biggest leader in terms of the number of ETH burned is tied to the Ethereum Improvement Proposal 1559.

The transition to the PoS consensus algorithm has been the biggest milestone for the Ethereum network since its inception. The lower issuance rate and burn mechanism have contributed to the network’s overall security and efficiency, and have further cemented Ethereum as one of the most trusted blockchain networks in existence. With the number of validators set to exceed 500,000 in 2023, the Ethereum network is sure to become even stronger.

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