Since its launch, Ethereum has seen tremendous growth in the cryptocurrency and blockchain world. The biggest hurdle for the blockchain network is scalability and a consequent reduction of the fees incurred by users of the blockchain.
The Ethereum Merge upgrades allowed Ethereum to transition from a Proof of Work (PoW) model to a fresh Proof of Stake (PoS) model. Along with the upgrades is the term “Ethereum Triple Halving.” Speculations among investors, traders and industry experts are ripe on how this phenomenon, an aftermath of the Merge, will affect ETH prices, fees and more.
Vitalik Buterin, a programmer and cryptocurrency researcher, created Ethereum in 2013. He had noticed that the blockchain technology behind Bitcoin had more utility than just sending money. He wanted to create a platform where developers could use blockchain technology to build decentralized applications (dApps). The Ethereum project took off in 2014 with its initial coin offering (ICO).
Let’s look at the sequence of events leading to Ethereum Triple Halving and highlight its potential implications for users, developers, and stakeholders.
The Merge: Ethereum transition from Proof-of-Work to Proof-of-Stake
The Merge is the Ethereum Mainnet’s switch to a Proof-of-Stake consensus algorithm. A consensus algorithm is a system for verifying transactions on a blockchain network.
This change represented the joining of Ethereum’s original proof-of-work blockchain with the Beacon Chain, signaling a fundamental shift in the network’s architecture.
The transition and eventual Merge were long processes. The separately shipped Beacon Chain allowed users to stake their Ethereum coins to receive rewards for keeping the network secure, while Mainnet continued its traditional proof-of-work consensus in parallel.
With such a tremendous shift from the traditional funding of miners to staking rewards, the Merge completed on September 15, 2022, and PoS consensus officially replaced PoW. This Merge confirmed Ethereum as the first major blockchain evaluating an entirely new system of securing its infrastructure.
This Merge enabled Ethereum to reduce its energy consumption by an incredible 99.95%, making it one of the world’s most sustainable blockchain networks.
The Merge’s Impact on ETH Supply
The Merge had a significant effect on the way ETH issuance. Prior to The Merge, Ethereum used a dual issuance model, where both the execution layer (i.e. Mainnet) and the consensus layer (i.e. Beacon Chain) issued new ETH.
With The Merge, issuance changed dramatically. It eliminated ETH issuance on the Mainnet and only issued ETH through the Beacon Chain staking system. This means that all issuance of new ETH is directly proportional to positive network participation and effective governance.
After The Merge, the total supply of ETH was around 120,520,000 ETH. While there will be no issuance from the execution layer, the consensus layer’s annualized issuance rate remains at approximately 0.52%. If these estimations hold true, this would reduce ETH issuance by 88.7% compared with prior estimates. This could be a major development for Ethereum and its future value.
Ethereum also has a Fee burning mechanism that went live after the London upgrade in August 2021 and remains unchanged since The Merge.
Validators can also incur penalties for being offline, or worse, slashed for breaking specific network rules by effectively removing their tokens from circulation.
EIP-1559 of the London Upgrade
EIP is an Ethereum Improvement Proposal.
EIP-1559 implementation within the London Upgrade introduced a unique transaction fee mechanism for users. While this mechanism is slightly more complex than what previously existed as a gas price auction, it possesses certain advantages.
EIP-1599 Fee Burn: Explained
Ethereum users initially faced a dilemma when processing their transactions. Since demand varied significantly, users paid high amounts for their transactions to be included in new blocks. Wallet providers such as Tomsk analyzed this demand and offer fee options, with wait times of up to 12 hours or longer that did not guarantee confirmation.
EIP-1559 removes the uncertainty related to transaction costs and sets a predetermined base fee for a block based on congestion.
The market-clearing price according to the gas limit and demand threshold determines the base fee. Instead of passing the fee to the miner, the ETH paid in the base fee gets burned.
Users, therefore, have to pay the base fees of a particular block and can add an optional tip to validators to get their transactions through faster during periods of high congestion.
One major advantage to EIP-1559 is that it saves users from having to engage in a guessing game for confirmation of transactions.
Why do validators consume less energy post-Merge?
The Merge removed Ethereum’s previous reliance on miners and instead uses staking as its consensus algorithm. This shift has drastically decreased the amount of energy required to secure the network.
The PoS consensus rewards stakers to take part by receiving rewards for validating transactions, and they incur no electricity costs since their hardware does not need to mine new blocks. This results in a much more energy-efficient network.
What is Ethereum Triple Halving?
The Ethereum Merge implemented a host of infrastructure changes to the Ethereum Network. One of these changes was the dramatic “triple halving” of ETH issuance in order to reduce the supply rate significantly, which was cut by over 80%.
Ethereum’s “triple halving” reduces Ether’s supply rate through the reduction in issuance, staking, and coin burning, as detailed in the previous sections.
The Significance of Ethereum Triple Halving
Ethereum’s triple halving is a major development that could have far-reaching implications for the Ethereum network. With fewer new coins entering circulation, the value of existing Ether holders should increase as scarcity increases. In addition, this will help reduce inflation and make ETH more attractive as an asset class.
Since ETH issuance is now tied to effective network participation, it means that Ethereum’s value is now more closely tied to the adoption and utility of its platform. This could reward developers to create more innovative applications on the network, which would further increase ETH’s value.
How Does Ethereum Triple Halving Affect the Price of ETH?
Analysts expect the Ethereum triple halving to have a significant impact on ETH’s price. As the supply of ETH reduces and scarcity increases, it should help increase its value. This will probably lead to an increase in demand for Ethereum as more users flock to purchase the asset.
Since ETH issuance is now tied to effective network participation, increased demand should lead to more active participation, which further increases the ETH value. Overall, the Ethereum triple halving could be a major factor in ETH’s price appreciation in the long-term.
How Does Triple Halving Impact the Scarcity of ETH?
The Ethereum triple halving has a major impact on the scarcity of ETH. The reduction in issuance, staking rewards, and coin burning limit the amount of new coins entering circulation, which increases the existing holders’ portion of the total supply. This should lead to an increase in its value over time as demand continues to grow while supply remains relatively static.
In addition, this could also increase the demand for ETH staking services, as individuals look to maximize their rewards from validating transactions on the Ethereum network.
What Are the Ethereum Triple Halving Price Predictions for the Future?
It is hard to make exact predictions about Ethereum’s price after the triple halving. However, the consensus appears to be that the reduction in supply should lead to an increase in ETH value. Here is our Ethereum price prediction for 2024 and 2028 factoring in Ethereum’s Triple halving:
Ethereum price prediction 2024
Our Ethereum price prediction for 2024 suggests that it has an impressive potential to reach a maximum price of $3,649.13. Along with this, the average forecast price of $3,026.60 is attractively high while its lowest possible price of $2,299.12 still produces profitable opportunities for investors compared to 2023’s prices.
Ethereum price prediction 2028
Our Ethereum price prediction for the year 2028 suggests an auspicious forecast for ETH token holders. The expected range of prices oscillates between a minimum of $12,894.99 and a maximum of $15,491.99, with an average of $13,354.16 forecasted across the year.
Bottomline
The Ethereum triple halving is one of the most significant events in Ethereum’s history, as it significantly reduces supply and should lead to an increase in ETH’s value. This could be a major factor in ETH’s price appreciation in the long-term.
The latest Ethereum price analysis shows a strong bearish sentiment in the market. ETH/USD pair has been on a downward trajectory since the start of this month and is now nearly 10% down from its all-month-time high of $1,585. The market crash that occurred a few weeks ago has led to a continuous bearish sentiment for Ethereum. This downward trend is further speeded up by the lack of significant buying interest in the market, which is leading to lower demand for ETH.
EIP-1559 Fee Burn also helps bring more transparency and certainty to the ETH market by setting a predetermined base fee for transactions, depending on congestion. It is difficult to predict the exact prices for Ethereum in the next few years, but its long-term potential is certainly exciting. As the demand for ETH grows, so does its scarcity, making it an attractive asset for investors who want to capitalize on its potential for growth. We look forward to seeing how the Ethereum triple halving will affect ETH’s price in the future.
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