Why is the total supply of Ethereum not rising?

Editor’s note: This article is from Ethereum enthusiast (ID: ethfans), written by Vitalik Buterin, translated & proofread by Min Min & Ajian. Authorized reprint by Odaily Star Daily.

Why is the total supply of Ethereum not rising? Why is Ethereum’s inflation rate increasing to 1? Because inflation in cryptocurrency is called “reserves.” However, when it undergoes a transition, its total supply will decrease. So, if there is any mechanism that can keep the quantity of its tokens constant or decrease the supply, then the issuance will double or triple, without affecting the price. In other words, over time, the concept of “reserves” will become more and more common and become an important topic. What is Bitcoin and Ethereum? Ethereum is a blockchain system. It achieves decentralization through proof of work. As part of the global computer system, the Ethereum network can be controlled and operated by users. Therefore, Bitcoin and other crypto assets are networks created and operated based on the proof of stake algorithm. However, although they have many fundamental functions, they also have some limitations. For example, Ethereum only allows transaction processing and uses a single hash function to execute. This technology is very different from traditional consensus structures. Bitcoin does not have its own value chain but is built on an application specific to a type, which often relies on specific node operators or software developers rather than third parties. Instead, they leverage smart contracts on the blockchain, including block production, miner fee income, etc., enabling each participant to receive the same rewards and forks. Due to the scalability and immutable nature of the blockchain, it can also provide better security. The Bitcoin network also supports various other types of services such as exchanges and payment channels, including wallets (such as PayPal, Visa, MasterCard, etc.) and debit cards (similar to banks). However, these services are not as efficient as some people imagine. In fact, these services are owned and managed by different entities: BitGo, ConsenSys, and RippleLabs. In addition, there are also some other services clients, including the Libra project of the DFINITY Foundation, as well as Coinbase, Circle, Kraken, and Gemini. Etherscan.io shows that the website currently lists over 1 billion ERC-20 tokens.

Why is Ethereum not rising?

Editor’s note: This article is from Honeycomb Finance News (ID: fengchao-caijing), written by Kyle, authorized reprint by Odaily Star Daily.

Ethereum has been performing poorly this year, and in recent days, it has become relatively quiet. Why is it not rising? First, the reason why ETH price is not high. According to CoinMarketCap data, as of 12:00 PM on October 13th, the market capitalization ranking first cryptocurrency, Ether, currently has a price of about $3.77 per coin, while BTC fell below the key level of $2.89 per coin on Tuesday and fell more than 5% again. Starting from near the historical high price of $10,000, it rebounded to around $7 USDT and then decreased. It has fallen below $60,000 at the time of publication. In addition, the total lock-up volume of DeFi applications on Ethereum has continued to rise and is currently around $1.4 billion, far higher than Bitcoin’s 20 times and more than 3 billion RMB, indicating that the market sentiment is not optimistic. Therefore, although the recent trend of ETH is relatively strong, compared with BTC, other altcoins perform relatively weakly, and its ecological development is still in the early stage, which may face risks in the future. Second, the reason why Ethereum is not rising: Ethereum 2.0 is coming.

The Ethereum network has been upgraded since November of last year, including features such as low transaction fees and good scalability. However, the Ethereum development community has been discussing how to involve more users in Ethereum and whether to introduce a staking mechanism to increase its value. However, due to the flaws of its PoW consensus algorithm, the gas fees of Ethereum remain high, and “mining” has become an important topic. “Miners” and “buying in” are another means of promoting blockchain technology. And when ETH 2.0 is completed, if Ethereum had similar development advantages in the second half of 2017, it is now an opportunity. Many investors believe that Ethereum will be widely adopted as one of the main factors in the bull market of 2017. In early 2018, the price of Bitcoin reached a high of nearly $20,000, then quickly plummeted to below $2,000 and finally hit a lowest point of around $3,000 at the end of 2020. (Huoxiaolü)

Three, what is the impact of Ethereum’s bear market? According to Coinmarketcap’s data, ETH’s market share so far this year is 65.6%, while this ratio in 2019 was only 24.7%. This means that the rise of Ethereum is very limited. For those who hold a large amount of Ether, the rise in late 2019 or even earlier may be due to the launch of the Ethereum 2.0 testnet, Ropsten.