Citi Praises Ethereum’s Energy Efficiency, Cites Passive Income That Emerged After Merge Upgrade

The Ethereum (ETH) Merge upgrade has completed and despite “high expectations” surrounding the transition, volatility has remained subdued, Citi wrote in a report released Friday.

The Merger was the first of five planned upgrades to the blockchain and involved the abandonment of traditional mining for a more energy efficient passive income system known as proof-of-stake (PoS).

The bank’s analysts point out that Ethereum is now 99.95% more energy efficient than when it used the previous proof-of-work (PoW) model – similar to Bitcoin (BTC).

Also, with the change, miners are no longer rewarded. Such rewards are equivalent, according to Citi, to a supply of 4.9 million ETH per year. ETH issuance is expected to fall by 90%, to around 600,000.

According to Citi, the total supply on the first day of the Merger dropped as the fees burned were greater than the rewards issued to validators.

Read more:
• Ethereum Merge Upgrade Completed Successfully: “First Step to a More Mature System” Says Co-Founder

In the report, the bank notes that ETH has become a yield asset following the removal of the mining system, with the current staking yield (type of passive income in crypto) at around 4.5% – higher than what some offer. traditional financial instruments.

In absolute terms, the text pointed out, ETH did not enter the Merge like before other updates, noting that for almost every other major network change, ETH won at the event and rose even higher afterwards.

Fusion “sets the stage for major scalability improvements,” but network rates are driven by network activity, the note said. The bank echoes the opinion of several experts about Merge and reinforces that the most important improvements for Ethereum will still come in a future update, probably in 2023.

While network activity has increased slightly as ETH now yields an income for validators, fees have remained relatively low as activity is still modest from historical levels, the note added.

How far will cryptocurrencies go? What’s the best way to buy them? We have prepared a free class with step by step. Click here to watch and receive InfoMoney’s cryptocurrency newsletter

Sign up and discover how to surf the Metaverse Boom and turn this technological evolution into excellent investment opportunities

Source link

About Admin

Check Also

New Pix rules come into effect next month

The Central Bank of Brazil released a statement this Thursday (12/01), informing that some changes …

Leave a Reply

Your email address will not be published. Required fields are marked *