Thread by @InvokerDungeons

Some say the #Merge transition effect of #ETH from POW to POS would be the equivalent of triple-halving of Bitcoin.

Let’s understand why it is so, and what’s different.
🧵👇

1/7
“Halving” first came from the #Bitcoin blockchain, where rewards in the form of Bitcoins were awarded to miners who helped to “secure the blockchain”.

If the block of assembled transactions is accepted and verified by other miners, then the miner receives a block reward.

2/7 Every 4 years (approx.), the rewards for #BTC miners issued out are reduced by half.

The reward started at 50BTC per successful block and now it is down to 6.25BTC per block after 3 halvings.

3/7 ETH was 100% pre-mined (72mil ETH). And the max circulating supply has been increasing since there is no hard cap unlike BTC.

About 13,000 ETHs are newly added to the total supply every single day.

Printing money, eh?

4/7 Once Merge hits, ETH switches to POS, and the daily new issuance will be only about 1,700 ETH, as compared to 13,000 ETH rn (POW).

3 halvings of 13,000 ETH/day is 1,625 ETH/day.
Do you get it now, why the Merge is equivalent to triple-halving?

5/7 A triple-halving reduction in new ETH issuance, does not mean supply will go deflationary.

Will it deflate in the future?
It is possible, if on-chain activity increases again and cause the coded mechanism to burn more eth.

6/7 The current DeFi and NFT narratives has pretty much peaked out and in low tide rn.

A new wave of innovation will be needed to start the burner again.

*It takes 17gwei gas fees to be deflationary, whereby fee burn >PoS issuance.

7/7 Will the price enjoy a nice pump immediately post Merge?
Probably.
But first we need 2 miracles.

Miracle #1: Merge successful.
Miracle #2: No malicious on-chain attackers on DeFi around the Merge.

*It took Bitcoin a few months after last halving to see price discovery.

What are your thoughts?

How are you positioning for the Merge and post Merge?

Let me know below?