Whats is next for Ethereum?

Is it a security? ETH Pros and Cons and how Inflation plays a role.

September 18, 2022

Contents (3 min read):

  • 🤷 What is Next for Ethereum

  • 🤔 What NOW for ETH?

  • 👨‍👩‍👧‍👧 Startupy - Community-curated search engine

  • 📈 Top 5 performers of the week

  • 📜 What’s going on with Inflation?

  • 📰 Top Reads

  • 🙏🏻 Grateful for…

🤷 What is Next for Ethereum?

Gary Gensler, who was nominated by President Joseph R. Biden to serve as Chair of the U.S. Securities and Exchange Commission on February 3, 2021, indicated that staking may be officially considered an investment. This would place the coin as staked under the purview of the SEC – not the Commodity Futures Trading Commission (CFTC), which often regulates cryptocurrencies in the US as digital commodities.

“From the coin’s perspective…that’s another indicia that under the Howey test, the investing public is anticipating profits based on the efforts of others. It looks very similar – with some changes of labeling – to lending.”

The Ethereum merge went perfectly as planned and now Ethereum is on Proof-Of-Stake consensus. Hours after the merge, the chairman of the SEC hinted that regulation may come hard after Ethereum and other cryptos. That sent the coin in a downward spiral and it has lost more than 20% of its value since the merge

🤔 What NOW?

Pros:

  • Staking becomes possible, i.e. positive real yield can be generated on ETH as a digital asset (5.5 - 13.2%), and thus for the first time, it becomes even possible to valuate a blockchain network via traditional cash-flow-based methods.

  • Supply will not only be capped but even reduced, i.e. deflationary through reduced ETH issuance and increased burns; ETH might therefore eventually increase in value.

  • The current estimate is that proof-of-stake will consume 99.95% less energy than proof-of-work.

  • The security of the network will be significantly increased to around USD $20 billion, compared to USD 5 billion for the already very secure Bitcoin network on PoW

Cons:

  • Institutions are still waiting on the sidelines and waiting to see if ETH will be considered a security prior to staking.

  • Most of the slow transaction speeds, high gas fees, and congestion problems are not solved yet, but the sound merge that we just witnessed will attract more developers and investors to work in tech to solve these issues.

  • Let’s not forget about other POS Layer-1 chains that have been gaining market share and attracting a lot of projects. Solana, Avalanche, Tezos have their share of problems, to say the least, but they still have the potential to thrive in this environment.

Conclusion:

Ethereum has made a monumental transition with the merge. All eyes are on ETH, from small investors to whales, from institutions to governments. Even if ETH is classified as security the future seems bright.

Developers and investors will work on making it faster, less expensive, and more mass adopted as thousands of apps depend on it. Staking is extremely attractive for all investors and deflation adds to the sexiness. It will continue to have many hurdles such as regulations, competitors, and security issues, but it is still the best chain in the blockchain world.

I am happy to announce that I have become a curator and member of Startupy. A community-curated search engine. Zero SEO BS. I invite you to join this delightful library of knowledge and insights designed for wandering, research, and thinking.

📈 Top Crypto movers of the week

📜 What’s going on with Inflation?

After Tuesday’s announcement of August’s Cost Price Index (CPI) data, it’s been a pretty brutal week across the markets.

August’s headline CPI number came in at 8.3% YoY (year over year) growth, this was down from 8.5% in July. But with the consensus analyst estimate at 8.1%, it’s not much of a surprise to see the reaction the markets have had. 

Although YoY CPI was down in August compared to July, because the market is forward-looking, it largely operates based on expectations. The aggregated expectation was that YoY CPI would decline by 40bps in the month of August, because it only fell by 20bps, we’re seeing a selloff

Above, you can see the inflation numbers for the past 12 months, broken down categorically. Fuel prices have seen the steepest increases, hence the higher energy prices as well as Airline fares.

📰 Top Reads

Reply

or to participate.