No Comments
In a highly anticipated move, Ethereum (ETH) has successfully launched the Dencun upgrade, and with experts labeling Ether a scarcity asset, is Ethereum now “ultra-sound money”? And is it better than top cryptocurrency Bitcoin?
As Ethereum prices smash above $4,000, UltraSound Money, the Ethereum-focused analytics platform has revealed that the recent activation of the Dencun upgrade has strengthened the crypto asset’s standing, making the second biggest coin, Ether, “ultra-sound money”.
Dencun Upgrade Goes Live On Ethereum: What Does This Mean For ETH?
Expert analysts from the analytics platform suggest that following the introduction of scarcity dynamics in the Dencun upgrade, there is a case that Ether could serve as a better store of value than gold or Bitcoin, positioning Ethereum as the world’s next potential ‘digital gold’.
At the same time, like Bitcoin, ETH can serve as a medium of exchange – and is used to do so across the network, with users paying gas fees to validators across the Ethereum ecosystem.
The Ethereum ecosystem is the largest, looking at the total value locked by decentralized finance (DeFi) protocols and even non-fungible token (NFT) minting decentralized apps.
Over time, ETH developers have been making enhancements to improve scalability, reduce gas fees, and even make the platform more environmentally friendly (the recent shift to Ethereum 2.0 saw the network’s carbon emissions reduce 10,000x).
In the latest move, on March 13, the blockchain activated the Dencun upgrade. Among the multiple changes Ethereum developers have made, this hard fork aimed to further slash gas fees, especially for layer-2 platforms.
However, what’s important to note is that the Dencun upgrade is a critical driver in transforming ETH’s utility into a driver of scarcity.
Here’s Why ETH Is Becoming Ultra Sound Money After Dencun Upgrade
In the Dencun upgrade, for example, developers implemented EIP-4844, or “proto-danksharding” – with this EIP, Ethereum is introducing a new transaction type called “blobs.”
Blobs are digital containers that can store large chunks of data, freeing up space in the main net, however, with “blobs” being a new data type, there will be “blob” fees that will be burnt, making ETH even more scarce.
Burning, in simple terms, is sending coins to an irretrievable address – removing them from play by reducing circulating supply.
The burning of the “Base fee” in Ethereum began after the implementation of EIP-1559, and since then, billions of dollars worth of Ether have been removed from circulation, a net positive for prices.
This burning process continues to this day and will perpetually reduce the circulating supply of ETH, with the rate of this reduction increasing following the Dencun upgrade.
UltraSound Money analysts also noted the proposed mechanism of Execution Tickets, which will burn some of the Miner Extractable Value (MEV).
In Ethereum, MEV is the additional profit a validator receives besides block rewards and fees. Additionally, Ethereum plans to introduce Stake Capping, which effectively limits the amount of ETH a validator can stake.
The Bottom Line: Dencun Introduces Scarcity
Ethereum is moving towards a similar scarcity model by implementing these burning accelerants.
Analysts and advocates believe this will make ETH “ultra-sound” and even better than gold as a scarcity asset.
Even so, the market has not responded positively to the change, looking at price action, despite rising in recent days – ETH is below $4,000.
However, the outlook remains bullish as buyers target 2021 all-time highs on the short-time frame.
EXPLORE: 7 BEST Meme Coins to Buy NOW – What is the NEXT SHIBA INU?
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
