There is an enormous demand for ETH. In August, Joe Lubin—the billionaire co-founder of ConsenSys noted that the currency is now transitioning into ultrasound money.
Bitcoin is “sound” money and a store of value in crypto circles, at least as things stand.
The Ethereum community is now hell-bent on making a mockery of Bitcoin and releasing a better version of money—a currency that is ultrasound and resistant to the value erosion due to inflation.
Justin Ðrake 🦇🔊 @drakefjustin
if capped-supply BTC is sound money 📢decreasing-supply ETH is ultrasound money 🦇
2:31 PM ∙ Sep 10, 2020
1,032Likes234Retweets
Their hopes are anchored on the network’s series of upgrades; all meant to reduce coin issuance amid an expansion in on-chain activity.
Undoubtedly, Ethereum is the most active smart contracting network. There are limits, of course, on throughput. Since there is more to be reaped from connecting to its well-developed infrastructure and becoming part of the vibrant web of an interconnected web, more are overlooking the scaling challenges and are keen more to launch from an established brand.
But just how popular is Ethereum?
There are over 200 DeFi projects—the most, and more than triple those in Polygon and the Binance Smart Chain (BSC). This is excluding the popularity of NFTs and the level of demand for assets minted on Ethereum rails.
Boxing in scaling, the competition for block space has seen fees soar as high as $100, causing congestion.
The rate of demand further coupled with on-chain mechanism which rid the bidding-base fee market for a fixed price and burning via EIP-1559 is the primary reason why ETH holders are permabulls.
According to trackers, to illustrate just how active Ethereum is and the number of ETH destroyed since August 1 when EIP-1559 was activated, over $931 million worth of ETH has been burnt. That’s over 290.29k ETH at the time of writing. Roughly 5 ETHs are taken out of circulation every minute. And this is getting even more interesting:
The popularity of NFTs—not DeFi—is the primary reason why most ETHs are being permanently taken out of circulation.
As per trackers, over 41.36k ETH have been destroyed since burning began, more than the activity generated from simple ETH transfers of which normal fees are charged. In mid-September, 25.47k ETH had been burned from ETH transfers. This is half the amount of ETH burned from OpenSea alone.
Notably, due to USDT minting on-chain, over 14k ETH has been destroyed as a result. Adding USDC to the equation—and excluding the on-chain DAI brings burned ETH to over 19k.
This rate is astounding.
Based on projections, the Ethereum network would soon be destroying 2.7 million ETH every year, inching closer to the 5.4 million ETHs issued every year.
The moment there would be more ETH burned than issued, the coin would officially be the official ultrasound money, better than gold and BTC.
In this case, there would be little reason not to expect ETH to surge upwards of $5k, even doubling to $10k in the months after new highs are printed. This is assuming the block space demand remains as it is.
And why not?
Crypto, DeFi, NFTs, and blockchain are slowly permeating into the mainstream, with more everyday users aware of the technology’s application and its finance revolution.
Given the pace at which NFTs popularity is burning ETH, the increasing application of ERC-721 and other standards in the multi-billion gaming, innovation in metaverses, and in eCommerce could see even more ETH destroyed. This would be regardless of whether NFTs are moved off-chain to layer-2 like ImmutableX. Settlement will still be in ETH, meaning more coins would be sucked out of circulation.
Meanwhile, over $27 billion of ETH is officially staked in the Eth2 Beacon Chain at the time of writing. These are coins that would be locked for at least one year until the merger happens—that’s when the Proof-of-work machine is shut down for validators.
Validators receive near risk-free yields since Ethereum is one of the most secure networks and miles ahead of other chains in competition. As a hint of just how on-demand ETH staking and validator requirements are stringent, it now takes over a week for a validator to be approved. The queue is growing longer with each passing day and would even take more time after merge when APY shoots, drawing stakers.
So much demand for “fuel” that’s on the path to be ultrasound money. Will ETH be the high paying alternative to treasuries?
